Sunday 18 August 2019

Draghi warns vulture funds bill 'undermines stability'

Mario Draghi
Mario Draghi
Charlie Weston

Charlie Weston

President of the European Central Bank (ECB) Mario Draghi said a proposed law to control the operation of vulture funds could undermine financial stability.

A top Department of Finance official also claimed to the Oireachtas Finance Committee that the 'No Consent, No Sale' bill is disproportionate and "likely unconstitutional".

The bill, proposed by Sinn Féin's Pearse Doherty, will give mortgage holders a veto before their home loan is sold to a vulture fund.

But the ECB boss said that if the bill became law it could reduce economic capacity and have a big impact on mortgage pricing and availability.

Mr Draghi, in a letter to the committee, warned the bill would have "significant adverse effects on Irish credit institutions' ability to participate in Eurosystem monetary policy operations".

"In turn, this is likely to result in additional costs being passed on to other borrowers," he said.

"It could also result in a significant impact on mortgage pricing and availability, and even an increase in [non-performing loans], all of which are likely to impact financial stability, Irish taxpayers and ultimately the Irish economy."

If banks are not able to sell non-performing loans this would add new costs for banks, which would be passed on to consumers.

Mr Doherty said it was important to protect homeowners from vultures preying on them.

Irish Independent

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