Pat the Banker earns his bread
Published 08/09/2013 | 05:00
Bank of Ireland has resorted to calling in the ghosts. When I arrived at the Dail's Finance Committee hearings last Wednesday, I fully expected to be spooked by the forbidding figure of Bank of Ireland boss Richie Boucher.
Boucher was there all right. Indeed, he was pontificating as I arrived, but it was the man beside him who sent me into spasms. There he sat perched on the podium, a veteran of past Oireachtas committees, a former general secretary of Fianna Fail, a senator nominated by Taoiseach Albert Reynolds, the last boss of the Irish Bankers' Federation, the one-time communications chief at the EBS, a fully paid-up member of the banking/politics old guard, Pat Farrell.
Today, Pat Farrell has been reincarnated as Richie Boucher's crutch. Although he carries his grandest, but most ridiculous, title yet, as 'Head of Group Communication and Government Relations', his latest mission is to soften Richie's battered image. Which places him somewhere between a masochist and a madman.
Of course, Pat is receiving a king's ransom from us Bank of Ireland shareholders for propping up a banker who should have been shown the door with the other banking casualties of the property boom.
I remember Pat at numerous Dail hearings. I saw him introducing Anglo's Willie McAteer, AIB's Donal Forde and Boucher himself to the Finance Committee in 2008. It was Pat the Banker who hosted a private farewell dinner for regulator chairman Brian Patterson at the height of the banking crisis, attended by Boucher, the unlamented financial regulator Paddy Neary, AIB's discredited boss Eugene Sheehy and other top brass. Somehow, Pat is still a player. Somehow, a few months ago, he landed the plum job as supreme spinner for his old crony Richie Boucher.
Farrell was only one of a heavy gang of BoI PR types at last week's hearing. In the gallery sat spinners galore. Their task – just like rival AIB's – is to pretend to the public that Ireland's humane bankers are playing softball with those in mortgage arrears while simultaneously meeting stiff targets to sort out the mortgage crisis.
Both banks are spinning the same yarn: they are well ahead of target in producing 'sustainable' solutions for distressed borrowers. Both landed in the same space, but by different routes. Both are fibbing.
The bankers' propaganda machines are deadly. Both Boucher and AIB chief David Duffy are publicly pleading with those in mortgage arrears to "engage" with them. Listen to the two boys sometime. They both use the syrupy language of the need for "dialogue".
"Dialogue" is the bankers' bait. Stuffed in their back pockets are the repossession orders. Today's bankers are not cuddly teddy bears. They are Greeks bearing gifts, financial terrorists, plotting an ambush for every defaulter. They are the banking sector's answer to those other guerrillas who carried a ballot paper in one hand and an armalite in the other.
Why should a sane defaulter trust the same vultures who lured them into a debt trap during the property frenzy? Once bitten . . . No one can blame down-and-out debtors for ignoring the threatening letters being dispatched with gay abandon by Duffy and Boucher. They are terrified of a repeat sting.
If Farrell and his squad were trying to transform Boucher from appearing like an abrasive bully into an emissary from St Vincent de Paul, Duffy's brief was to charm the committee with sweet reason. Duffy is a different creature from Boucher. While the BoI chief must be a spinner's nightmare, Duffy is a flexible toad. He appeared on Tuesday tanned and tidy, not a hair out of place, crisp in his responses, polite, patient and polished. He, too, brought his own army of spinners to the hearing.
They watched approvingly from the sidelines. Yet his words were even more lethal than Boucher's because they were delivered with such aplomb. Duffy smiles often. Boucher never does. On Tuesday afternoon, the suave AIB man nearly pulled a mighty stroke that would have appealed to Farrell's Fianna Fail genes. Yes, admitted Duffy, AIB had posted nearly 6,000 "legal letters" to those borrowers who would not "engage", but only to those who did not "prioritise" their mortgages.
Perhaps Duffy was referring to the villains who preferred to put bread on the table? Or to the rogues who paid their property taxes before their mortgages? By implication, Duffy was demanding (in cuddly phrases) that AIB elbows its way to the front of the queue.
Duffy's stroke was exposed when he conceded that the 6,000 legal letters were being counted by AIB as part of the 'sustainable' solution target set by the Central Bank. Observers were incredulous.
If the Central Bank governor Patrick Honohan allows Duffy to sweet-talk him into accepting such a wheeze, AIB could have sorted its mortgage arrears crisis before Christmas!
If legal letters are counted as "sustainable solutions", Duffy need merely instruct his staff to contact awkward clients and threaten legal action. Then he can tick the "sustainable solution" box and look for an increase in his meagre €540,000 annual package.
A threatening letter will be counted as 'sustainable' by AIB because it will be heading for a solution all right, albeit in the courts and with thousands of evictions. Hardly an amicable one. And we are unlikely to see 6,000 court cases. Good try.
Some members of the Dail appeared to have fallen for the Duffy charm offensive. It was deeply depressing. Labour's Aodhan O Riordan was fawning over AIB's suddenly conciliatory stance on Priory Hall. Others were not fooled by token gestures.
On the surface, Boucher was not nearly as conciliatory as his AIB colleague. The man from Zambia is a rough diamond, not as well manicured as Duffy. Boucher is peddling a shopping list of 'sustainable solutions' but, as TD Stephen Donnelly pointed out, nearly all of them would cost the borrower more in the long run.
Tweedle Dee Duffy was offering legal letters and confrontation as the way forward. Tweedle Dum Boucher was suggesting that borrowers in distress should accept solutions that meant that they repay more money in the end.
No one asked Boucher how on earth they would be able to pay more under his plan when they had already defaulted on a smaller debt.
No doubt Pat Farrell would have fed him the right reply. The spinners from both banks, in full control of the process, are in unison. Both are now subtly demonising all borrowers in arrears. Duffy has insinuated that 20 per cent are in the "strategic default" corner, meaning that they are able to pay, but are refusing.
To his credit, for once, Boucher does not swallow this rubbish. Duffy has produced little evidence to support his claim.
But both unite in currying favour with compliant borrowers by pouring patronising praise on them. By doing this, they hope to mobilise public opinion against those defaulters who are drowning in debt.
The bankers' strategy is to put forward fantasy solutions that will postpone a writedown of any debt on their books. As next year's stress tests loom, they are desperately clinging to their phantom 'sustainable solutions'. Their response to the Central Bank's targets has been nothing short of contemptuous.
Duffy and Boucher have produced short-term measures, postponements posturing as long-term solutions. They are geniuses, running rings around the Central Bank, the Government and, last week, around many of the assembled politicians.
Duffy and Boucher must be looking forward to the banking inquiry. It promises to be a picnic for the banks and a lap of honour for Farrell and the spinners.