Shatter talks tough on mortgages
Minister says banks have failed to deal with arrears and negative equity but will now be forced to do so
IRISH banks have failed to adequately tackle the mortgage debt crisis but will be compelled to do so by the Government's Insolvency Bill, which is due to be published next month, Justice Minister Alan Shatter has said.
Speaking to the Sunday Independent yesterday about the Government's search for the director of the new Insolvency Service, Mr Shatter said the recapitalised banks had failed to do enough to help those in mortgage distress. He added that this must and will change.
The minister's strong comments echo the deep anger held by an overwhelming majority of the Irish public -- 86 per cent -- who feel that the banks have not so far done enough to help those who are in mortgage arrears or negative equity.
"The banks must do their part," said Mr Shatter. "They have been recapitalised, they have been stress-tested, which included provision to deal with the mortgage crisis. They haven't done so sufficiently to date but this legislation will compel them to engage constructively with those in distressed circumstances."
Mr Shatter also lashed the banks' lack of expertise in dealing with those in difficulty -- one in every 10 mortgages is now in arrears of over 90 days -- and called on them to properly engage with those who are in trouble.
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Referring to what he called "the lack of skill set," the minister said: "The bank system was orientated to sell mortgages. People were trained to go out and sell mortgages and earn a commission.
"We need a banking system that truly engages with people who are in trouble and offers real options that are suitable for those in need. There has been a problem both with the focus and the skill set of the banks and that must change."
While Mr Shatter said yesterday that the bill was not likely to become law until the autumn, the Sunday Independent has been told that Labour ministers are prepared to "sit in the Dail until August if necessary" to ensure its passage.
Today in this newspaper, Mr Shatter's department is advertising for the post of director of the New Personal Insolvency Service, which he said marked a real milestone in the Government's "ground-breaking" approach to the debt crisis.
The post, which will carry a final salary of €146,191 once a series of increments are earned, is regarded as the "first crucial step" in dealing with the mortgage debt crisis.
The heads of the Personal Insolvency Bill were published in January and officials from the ECB/EU/IMF Troika welcomed the Government's willingness to tackle the debt crisis, but urged careful design of the legislation as to avoid incentivising strategic or wholesale abuse of the system, which Mr Shatter said was designed to give people in need a second chance.
The political desire around the Cabinet table to get the bill through as quickly as possible is clear, as Social Protection Minister Joan Burton said she hoped the promised helpline for those in arrears could be set up in late June or early July. She said all ministers were united in the belief that you can't have the most productive generations of the State being mired in debt for decades with no way out.
Mr Shatter's staunch criticisms of the banks' behaviour echoes the strong public resentment over their lack of action in tackling the personal insolvency crisis to date, the latest Sunday Independent/MillwardBrown Lansdowne nationwide poll.
An overwhelming majority of people, 86 per cent, said the banks were not doing enough to help homeowners.