Thursday 14 November 2019

Public banking on good sense

Perhaps the most sensible thing said so far in the great "debt forgiveness" debate came from the Fine Gael backbench TD John Deasy, who accused government ministers of loose talk and giving false hope to stressed homebuyers.

He is right, but so is the banker who told this newspaper that there is a serious issue of debt overhanging the economy, and that solutions have to be found. Finding solutions which do not make matters worse will be as delicate a political manoeuvre as any government has ever had to face.

As our investigation in today's newspaper shows, banks are quietly making arrangements with customers who are unable to meet their repayments in full -- or even with some who can but who are trapped in negative equity.

But banks rightly fear the consequences if such deals are seen as a "product," available to anyone who is finding the going tough with their mortgages.

The Government would be wise to fear that as well. Its problem is that, while something must be done, can it be done in a way that meets Finance Minister Michael Noonan's distinction between those who can't pay and those who won't?

It is good that the banks are prepared to look at a range of options for their customers. But none of them are soft options, involving people who have already handed back the keys, or may have a court judgment registered against them as part of the deal, or who will get negative equity relief only if they can fully afford their new mortgage.

This may not be what the public understands by "debt forgiveness", but something like it is what they will get.

Mr Noonan came close to making this point yesterday, when he said those who had to avail of debt relief would be worse off in some way as a result.

He did not elaborate, and clearly it would be bad politics to do so.

However, the politics of this are bound to be bad, even if it achieves the aim of making sure no genuine cases are left homeless.

The real trick is to ensure that the political disappointment turns out to be no worse than it has to be.

Irish Independent

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