Monday 26 September 2016

Our politicians are powerless eunuchs in the face of bankers' new martial law

Published 16/07/2015 | 02:30

'Presumably Enda Kenny & Co aren't idiots, they don't naively expect bankers to re-elect them'
'Presumably Enda Kenny & Co aren't idiots, they don't naively expect bankers to re-elect them'

Today marks the informal end to this Dáil. When the 31st Dáil resumes in September, it'll be a lame-duck forum, as decks are cleared for an elongated election campaign, with the Budget being the final pre-electioneering act.

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How apt that the last legislative deed to be enacted this week was the Personal Insolvency (Amendment) Bill 2014. It's a fitting epitaph to the impotency of our political class, post-recession.

Both in Brussels and Dublin, politicians are reduced to eunuchs - powerless to repel the authority of capital through the prevailing iron rule of the banking classes.

Over recent months, ministers promised to inject new impetus into the personal insolvency regime which has seen the State's Insolvency Service of Ireland fail to tackle tens of thousands of hard-core mortgage and business arrears cases. Legislation in 2012 anticipated that courts would process torrents of both bankruptcy and Personal Insolvency Arrangements (PIAs) to resolve legacy issues of bad debt. It never happened for two principal reasons: firstly, because bankers were given a veto over professionally and independently prepared debt repayment plans; secondly, the three-year bankruptcy term and further five-year income payment period was so restrictive as to represent no escape from debt distress. To great fanfare, these obstacles were to be reformed.

Justice Minister Frances Fitzgerald, in Report stage Dáil amendments, effectively torpedoed hopes for debtors. Rights of court appeal against a bank veto have been so circumscribed as to be almost useless. Where all creditors vote against your insolvency proposal, you're prohibited from an appeal. If your sole creditor is a lending institution (ie. you had no debts other than a mortgage), you can't have the veto reconsidered.

Only insolvency arrangements involving a family home are eligible.

Only those who are in mortgage arrears prior to January 1 2015 are eligible to appeal: to put it into context, only 500 out of 75,000 property loan arrears cases have availed of the new regime.

The costs of appeals have to be paid by debtors, including the other side's prohibitive costs if you lose.

The Oireachtas Justice Committee has just reached conclusions on Labour TD Willie Penrose's private members bill to reduce the bankruptcy period from three years to one. They agreed on the shorter period in all cases except where a person has excessive unsecured debt relative to mortgage/business debts and if they failed to cooperate with creditors.

The Government deliberately excludes these proposals in this week's Dáil amendments. The Cabinet doesn't support anything other than a punishment culture for debtors. They've consistently obstructed relieving measures, despite a proven success record of the insolvency regime in the UK for both creditors and debtors. Tens of thousands of families with unsustainable debt face threats and eviction.

This Government stance follows a familiar and consistent pattern of political subservience to bankers. Michael Noonan promised variable mortgage rates would be cut by July 1, threatening Central Bank regulation and/or a hefty increase in bank levies in the forthcoming Budget. When bankers bluntly refused to comply, the Government acquiesced in tolerating excess profits on 300,000 mortgage holders, who'll continue to pay up to 4.5pc penal rates.

Seven banks were recently found by regulators to have breached compliance with the Code of Conduct on Mortgage Arrears, involving abuses of distressed borrowers. Significant delays and incomplete communications by lenders in progressing cases through the Mortgage Arrears Resolution Process were acknowledged. No sanctions, not even 'name and shame' revelations, have ensued.

Presumably Enda Kenny & Co aren't idiots, they don't naively expect bankers to re-elect them; their political pitch isn't that of a de facto Banks' Party. Word on the grapevine is the same cosy relationship between bankers and the Department of Finance is as close as ever before or during the credit bubble era and bank bailout/guarantee salvation policy. So much so that the new amendments seek to crack down on new oversight measures of registered independent Personal Insolvency Practitioners (PIPs) - at the behest of the banks.

What banks seek is what will be legislated and regulated; we save banks, they screw punters.

This precisely coincides with and mirrors events in Brussels for the Greek people. A third bailout is conditional on sequestering a nation's assets of €50bn, holding them in trust by the likes of Germany's KFW bank. The democratic will of a referendum has delivered a humiliating punishment beating. The driving force to demean Greece has been bank closures. The unambiguous lesson for all eurozone states is crystal clear: "Your economies will be starved into submission by systemic shutdown of banks."

Beyond political, budgetary policy and sovereign debt debates, a new weapon of mass economic destruction is deployable by the ECB to cripple any government, irrespective of its mandate. A new protectorate order emerges through ATMs.

The difference between this crash (2008-12) and previous recessions was the entire collapse of indigenous banking systems. Out of the ashes of public ignominy, guess who's emerged as most omnipotent? Bankers. Nowhere more so than in Ireland. In the US, manipulation of Libor and Euribor rates resulted in mega-fines for banks from the Department of Justice and Commodity Futures Trading Commission of up to $1.5bn per bank. Criminal sanctions applied to rate-fixing culprits. In Britain, hundreds of millions were paid to consumers under mis-sold payment protection insurance scams.

Here the small print terms minimised claimants' rights by rigidly preventing backdated claims prior to 2006. Despite our most favourable regulatory regime for bankers, we've least competition following the greatest exodus of foreign banks.

There's the same political submission on issues of insolvency, repossessions, interest charges, regulation, oversight, sanctions, profit margins, competition and now even sovereign independence.

There's a new martial law in Europe, it's ECB rule. Maybe apathy and anger against politicians are apt, as they capitulate to bankers, leaving voters defenceless.

Irish Independent

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