Welcome move by banks to tackle the debt crisis
Talks involving the main financial institutions aimed at a joint initiative to tackle the debt crisis are to be welcomed. The piecemeal approach to the problem so far has meant that debt forgiveness has proceeded at a snail's pace, few deals have been done and various institutions have been looking over their shoulders to make sure they are not the ones who get 'stiffed' in the process.
Close to 100,000 residential mortgage accounts are in arrears, and, mainly because of various other debts, the mortgage payments have stopped or are not being paid in full. If the banks can come to an agreement among themselves it could mean each of them taking a hit for unsecured debt such as car loans and other borrowings. In return, the relieved borrowers would resume full mortgage payments.
However, before borrowers get their hopes up, it might not mean a complete write-off of debt, but a 'holiday' from some repayments, which would give them breathing space to resume payments to their biggest creditor, their mortgage company.
Talks on a similar scheme collapsed last year when the credit unions pulled out. The talks to revive the scheme are confined to the main banks and do not involve either credit unions or the country's main credit card provider. As the banks find themselves in this together, it is to be hoped that they can find a workable scheme.