Homeowners to blame for crisis too, says Bruton
Irish people 'ought to have been aware where things were going' when buying during boom
Published 10/04/2011 | 05:00
FORMER Taoiseach John Bruton says that Irish people "ought to have been aware where things were going" with the economy when they bought houses during the boom.
"I have been someone who has been very critical of the EU authorities and the ECB and others in not using powers that they clearly had under the treaties to ensure prudential supervision both in the countries lending to Ireland and in the Irish banks themselves, and I think there is a responsibility there that I don't row back from, but, on the other hand, we also ought to have been aware where things were going.
"Everybody could see that house prices were rising faster [than they should have been]," Mr Bruton -- who now holds the position of president of the IFSC -- told the Sunday Independent.
The former Taoiseach's attempt to add ordinary homeowners to the list of those whom he believes are to blame for Ireland's economic difficulties will be seen as particularly insensitive, coming in a week in which the ECB hiked its key interest rate by 0.25 per cent to 1.25 per cent, heaping further misery on hundreds of thousands of families.
According to the latest figures from the Central Bank, 44,508 borrowers were already three months or more behind in their repayments and owed €709m in back payments at the end of last December.
Responding to the point that many had merely paid the going market rate, Mr Bruton -- who was attending the inaugural conference of Federation of International Bankers at the Four Seasons Hotel in Dublin -- conceded that there were "people who bought their first and only house at a very high price".
"Those people are in a very difficult situation," Mr Bruton said, before going on to criticise those who had bought buy-to-let properties.
"We had as a country perhaps a sense of comfort with houses, even houses in other countries.
"Houses accommodate people but they don't produce wealth unless people want to live in them and pay a rent. People probably invested too heavily in one field, namely property," he said.
But whatever his views are on the plight of ordinary homeowners and small-time property investors, Mr Bruton insisted that the restoration of our banking system had to take priority.
Asked if he believed it was fair that taxpayers were being forced to carry the €70bn burden of bailing out the banks, Mr Bruton pointedly avoided the question, saying: "I suppose what we have got to look at is what we need at this stage.
"One thing we certainly need is a functioning banking system. The country would come to a stop if it didn't have a banking system."
He also appeared to endorse the decision on the night of September 29/30, 2008, by former Taoiseach Brian Cowen and his finance minister Brian Lenihan to guarantee the deposits of all the Irish banks, Anglo Irish Bank included.
He said: "Of course, one can look back and say we could have taken a more daring approach back in 2008 and allowed some banks to fail.
"And that experiment was tried with Lehman Brothers two weeks previous to our decision and we know the consequences of that. It was also tried in 1931 by another small European country, Austria, and that led to a rash of bank failures."