Time to heed banking alarm
When the Governor of the Central Bank, Patrick Honohan, and the Financial Regulator, Matthew Elderfield, both express their alarm at the extent of the mortgage crisis, it is time for the banks to explain why they have been so tardy in seeking a remedy -- and to persuade the Government and the public that they intend to take early action.
Over the last year, the crisis has escalated rapidly. It is calculated that more than 10pc of all mortgage holders are now in arrears of more than three months. A further 10pc may be experiencing what has been called "some level of distress". Many thousands stand to lose their homes.
In addition, the Government may have to engage in another round of recapitalising the banks. Frightening figures like €40bn have been bandied about. Where to find the money? There has been speculation about a second bailout from the EU and IMF. Even assuming that we could get it, could we afford it?
Not only is the need for action obvious, a blueprint exists in the form of the Keane Report, published last autumn.
This report, in brief, divides troubled mortgage holders into two categories.
The great majority will come through the crisis with their main objective safe. They will remain in possession of their homes.
But to ensure that desirable end, they will need concessions from the lenders. These concessions can best be made on a case-by-case basis.
Some people are more reliable, or luckier; personal circumstances can change suddenly, for the better as well as the worse.
The second category consists of those who will never be able to pay back their debts. For some, the best course might be to "hand back the keys".
For most, a solution may be found in mortgage-to-rent schemes, whereby they would continue to live in their homes but would no longer own them.
All the possible courses of action have this in common: they will necessitate a huge amount of work from the parties concerned.
In particular, the banks need precise information about the circumstances -- not just in relation to mortgages -- of those in arrears and their prospects of finding reliable means of payment.
In fairness, the banks have made considerable progress, especially in relation to expertise, in recent times. They have recruited high-powered staff with expertise and an interest in the challenge.
But that is far from sufficient.
Almost four years have passed since the financial crisis broke upon us.
The sight of lenders responding slowly and reluctantly -- under constant pressure from the authorities -- is not an encouraging one. Yesterday's "going public" exercise by Dr Honohan and Mr Elderfield should remind them of the urgency of the issue.