Financiers say greed is not only good, but that it is necessary
Published 01/08/2015 | 02:30
The solicitor's letter comes in a crisp white envelope marked 'strictly confidential'. On opening it you are drawn to the stark formality - the title, reference and account numbers, and to the bold letters announcing: Our client - Permanent TSB.
The letter proclaims you are in default on your mortgage payments and that the bank now demands IMMEDIATE payment of €357,543.23 (or whatever amount applies), in default of which you are REQUIRED to surrender your home to the bank within seven days of the date hereof.
After that, it is gobbledygook - talk of court proceedings, breach of contractual duties, legal costs of thousands of euro, immediate action and so on, and so forth.
Imagine, if you will, the raw experience of receiving this letter. Not only does it signify my defeat as a person, but as I look around at my kids - oblivious to all of this - I experience the invasion of a space I once thought inviolable. And I am to blame.
But in the case of hundreds of PTSB borrowers, there was no default and the demand for payment was illegal. The bank had contrived to ask for more than was owed and had driven families into default. It is a terrible fact, but for at least some of the families affected, the lawyers did their job and families left their homes, or some judge ordered them to do so.
For most of us, buying a house is a major life event. It involves an upfront cost that may equal a lifetime of family holidays and then a commitment to 20 or 30 years of the largest monthly payments. Every life decision is affected by this single transaction - job, partner, when and if to have children, even how many children to have.
People are willing to do this and to live with its expensive consequences because of what it offers - security, a place of my own - in a word, a 'home' and all that means.
And a home means more than bricks and mortar or 'debt to value ratio' or 'Euribor rates' or 'securitisation'.
Home is, in this secular world, a spiritual place, a place of refuge away from the cares of the world. It is where children live and grow and where each of us, young or old, rich or poor, big or small, maybe can, even sometimes, just be ourselves. Between the walls of where we call home, families have a physical place. We hang pictures and eat together and grandparents visit and are loved - the stuff of real human life, so removed from the stuff of big finance.
What was it like for the family who worked long days, who brought children to a crèche, and who paid their taxes, to be forced from their home because they could not afford an interest rate they should never have been asked to pay? They will not have understood the wrong - but they will have known the terror of appearing before a court or the defeat of having to tell their children that "we have to go".
The PTSB scandal should come as no surprise.
There are cases before the courts at present where other banks are alleged to have done the same and Irish banks still massively overcharge on interest rates where they believe they can. The surprise of the PTSB case is that it was accepted by the Ombudsman and the courts - institutions that have done so little to address the terrible wrongs done to society by the financial world.
Globally, banks have manipulated interest rates; they have falsified accounts; they have convinced people to borrow badly and then sold on the loans leaving the borrower destitute - and all the while they have given themselves huge bonuses based on a claim that if you want quality you must pay for it. In Ireland they created a false market and left hundreds of thousands of young families mired in unsustainable debt, while crawling to a supine government to seek a bailout.
Why do banks act as they do? Why are they willing to charge interest rates at twice the European average on debts much greater than elsewhere? Why have they, and do they, deliberately deny people the benefits of lesser rates, even where people are manifestly entitled to them? The financiers say, and believe, that greed is not only good, but that it is necessary. It is this philosophy that allows them to wrongly add points to an interest rate, and to turn a blind eye when a family struggles.
And they are not alone here.
Since 2008, our political leaders have set themselves one task - to save the banks. Seven years later, hundreds of thousands of our families struggle with gargantuan debts. The toll on them has been huge and the banks remain moribund.
In New Beginning we have witnessed a world of international avarice pitched against thousands of homesteads. The families do not always understand the complex world of financial chicanery but every parent we meet knows what their children need - security.
This is not about PTSB overcharging families and getting caught - it is about what we are as a society. But our society reflects our thinking - and our banks and Government, behind all the spin and the clever marketing, still believe greed is good and necessary.
Ross Maguire is a co-founder of New Beginning.