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Why no debt write-off sooner?

It’s good that AIB is facing reality and writing-off unsustainable debts, but why has it taken so long?

No one seems interested in asking that. AIB (and other banks) had these figures years ago, when they applied to the Irish taxpayer for bail-out funds. The billions they requested were to write-off loans that the banks said could never be repaid by customers, and to repay the original lender (the big bad German and French banks).

In a small country like Ireland, every person with a debt, no matter what their financial position, should undergo a full and frank, detailed financial review, carried out by an impartial consumer organisation, to verify who has sustainable debts and who doesn’t.

For example, if your mortgage is more than 50% of your net take-home pay, is that sustainable? If your fixed utility and living costs are more than 30%, is that sustainable? From the remaining 20% of net income, can a person live, afford a holiday or savings or a pension? If not, what will be sacrificed? It doesn’t take a genius to create a customer-centric format for such a financial review. You borrow, for a mortgage, from AIB. AIB borrows the mortgage from a German or French bank. You repay AIB each month. AIB repays the German or French bank each month. AIB takes a slice of the interest as profit. The German or French bank takes a slice. The rest pays back the capital amount. The markets crash, the German or French banks panic and want their loan back in one go, and get the ECB to bully the Irish government, which caves immediately.

AIB goes to the government and says the lender it borrowed from, for X list of loans, wants its money back, so can we have X billion (did they even say ‘please’?). For reasons that remain unclear, our government had already caved, so it agreed to pay the money and give the billions requested, which were, in turn, passed onto the German or French banks. Their bank debt is cleared, but the person who borrowed that money didn’t get a write-off of the linked debt, and is still paying it back each month.

So, why hasn’t the Minister for Finance asked AIB, and the other banks, what exactly, to the cent, it did with the billions that were handed over. Because when AIB paid the German and French banks, there was no debt outstanding. This is no different than a person taking out a mortgage, and a few months later going into the bank with a lump sum and clearing the mortgage, but AIB continue charging him the monthly loan amount, even though he’d paid off the debt. What part of debt write-off have I missed that the write-off never managed to make it down to the customer who borrowed the money?

Desmond Fitzgerald
Canary Wharf


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