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Central Bank governor's criticism of himself is spot-on


Patrick Honohan encouraged mortgage holders to switch

Patrick Honohan encouraged mortgage holders to switch

Patrick Honohan encouraged mortgage holders to switch

The admission by Central Bank governor Patrick Honohan that he is not good manager will come as little surprise to those watching his performance in his role over the past six years.

He has many good qualities. These include being a straight talker, having a brilliant mind and being dispassionate.

A great man for an overview of the situation, but not so good when it comes to the nitty gritty of ensuring targets are met and things get done, is probably a fair summation of him.

Nowhere is this more clear than in his handling of two persistent problems he should have done more to grapple with - mortgage arrears and the scandal of rip-off variable mortgage rates.

The banks have run rings around Prof Honohan and his staff in the Central Bank when it comes to mortgage arrears.

Seven years after the savage financial bust, the numbers that are more than two years in arrears continue to rise.

There are now almost one in 20 residential mortgage accounts that are over two years behind on their payments.

These people are at severe risk of losing their homes.

Yet the banks have been allowed to concentrate their arrears solution activity on those who are in early arrears. In other words, the easy cases to fix.

And even then the sort of solutions being offered are questionable. Large numbers of those in trouble are having their arrears capitalised - where the arrears amount is added to the mortgage principal.

Arrears capitalisation cases are at high risk of re-defaulting.

Allowing the banks to operate like this is a clear failure of management by the Central Bank, and is not the sort of legacy Prof Honohan would have wanted.

Then there is his handling of the scandalous variable rates charged to 300,000 mortgage holders.

Prof Honohan spoke to TDs and senators at length on this last week. His speech contained clear and clever arguments on why it would be a bad idea for legislation to be enacted to allow him to regulate interest rates.

But his speech was short on references to the financial pain suffered by those forced to pay up to €6,000 more a year than those on trackers.

A good manager would never have allowed that situation to get so out of hand.

Irish Independent