Wednesday 20 February 2019

ECB can't be allowed to rewrite our history

While one must condemn unreservedly the riots and violence that erupted in Frankfurt yesterday, one must also wonder how an institution such as the European Central Bank (ECB) can countenance spending €1.3bn on an office block for itself.

At the opening of what must be a very opulent building in the German financial capital, the President of the ECB said the bank could not be blamed for the austerity that has dominated the lives of most of our citizens for the past seven years. In that Mario Draghi is, at least, partly correct.

But let us be clear that the ECB did play its part in leading Ireland into the bubble that led to the devastating financial and property collapse. The design and implementation of the euro was at fault, in that it led to a one-interest-rate-fits-all scenario. This led to a dramatic fall in interest rates in Ireland and builders and bankers indulged in a spending spree that resulted in us buying and selling property to each other at ever spiralling prices.

Mr Draghi and the ECB should not be allowed to re-write history and our Government must continue to demand a major write-down in our enormous legacy bank debt.

Sanctions needed for bank breaches of code

It is certainly troubling that not one mortgage lender has been fined for breaching the Central Bank's Code of Conduct on Mortgage Arrears since it was introduced in the wake of the property collapse and the very real threat of repossession facing many households.

While we would not want to paint the banks and financial institutions as the only 'bad guys' in the property collapse, they certainly played a major part in what we now know was reckless lending on a very large scale.

Now a number of advocacy groups working on behalf of those in mortgage arrears have questioned how the code of conduct is being policed by our Central Bank.

The Free Legal Advice Centres (FLAC), the Consumer Association and the Irish Mortgage Holders Association have all questioned its usefulness, in that not one of the lenders involved have been sanctioned.

This comes at a time when we know that there are 28,000 mortgages more than two years in arrears and the banks have launched legal action to repossess an estimated thousand houses a week.

Under the code, if a borrower is deemed to be uncooperative with their lender, then they lose the protection afforded by the code, which is a statutory instrument. But the question is, who decides who is uncooperative? It may very well be that some homeowners have lost their privileges because they were unable or unwilling to fill in the voluminous bureaucratic correspondence and detail required by banks.

Paul Joyce of FLAC makes no bones about it that "there are definitively breaches of the code by lenders".

Some supporters of the banks do point out, however, that they have reclassified or restructured over 90,000 mortgages in the past few years, which has been of benefit to the banks, but more importantly it has allowed people in difficulty to continue to live in their homes with the prospect that one day they might even own them.

However, there can be little doubt that there is no point in having a code of conduct if it is not enforced. It is the Central Bank's job to do this and be seen to be doing it. Unfortunately, that is not the case at this point in time.

Irish Independent

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