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Bank of Ireland’s massive losses of €1.26bn is all the evidence anyone needs of the deepening and grave debt crisis within the Irish banking system, and critically the Irish economy as a whole.
Unfortunately, finance is a two-way street, and money once borrowed has to be paid back, otherwise a financial institution collapses. We have those who cannot pay who need better money management skills, and those who are brazen and do not want to pay. These non-payers deserve no sympathy and are contributing to a downward slide in lending overall.
The banks are now showing major caution and severe reluctance when issuing loans and who could blame them? We also have many people in difficulty in this country who borrowed far too much and who have seriously misled their financial institution in the process. Undoubtedly, some employers have misstated the earnings of their employees to get loans that were way over their heads, which has led them into dire straits and the knock-on effect for the taxpayer. Any employers involved in such activity should receive massive fines and jail time for any director or manager that falsifies any financial document on behalf of an employee or themselves. The effect of all this carry on is that banks are now more likely to turn down a loan application, rather than approve it. Many mortgage holders and businesses are too proud or afraid to tell their financial institution that they are in trouble with loans, and wait until they are cashed out before they tell the truth.
This behaviour is disastrous and those that wait until there is nothing left deserve little sympathy, if any.
Many financial institutions can reschedule and downsize payments, thereby improving the borrower’s ability to pay back, and thus not get into a situation where they cannot cope and end up in court with additional costs involved. The borrowing culture in this country has to change in favour of more healthier practices, otherwise we will end up with more and more banks under State control and the enormous cost of keeping them afloat.
It is time for people to get real about the country’s debt crisis — it is not going away anytime soon and appears to be getting worse in the short to medium term.
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