Prime Time on the Mortgage Debt Debate

This evening’s Prime Time featured the mortgage debt forgiveness/resolution debate, with a prominent contribution from our own Greg Connor.   You can view it here. 

22 replies on “Prime Time on the Mortgage Debt Debate”

In respect of the Expert Group, anyone know

(1) The terms of reference
(2) Details of setting up, appointment and key milestones
(3) Date for reporting, and detail of what is to be reported
(4) Members, their names and relevant experience
(5) The resourcing, financial and human capital, provided to the group

First I heard of this group was last week.

It is possible to create a synthetic devaluation using a combination of fiscal means (higher taxes on imports) and debt “forgiveness”.
This will create a functioning market for the best located properties and return isolated properties to their more natural agricultural price.

If we don’t it will be acheived more bluntly via a Punt devaluation anyway.

Start with raising the price of petrol to British levels , and adding 1000 euros to car tax.
Reducing the money supply that pays down debt is crazy – you must give people a choice to reduce consumption – not lock them in suburban prisons hoping everything will work out in the end.

Reducing Garda numbers and other personnel is a completly false bookkeeping economy – its now accountants & bankers running what remains of a real physical economy – a complete disaster.

First I heard of this group was last week.

The expert group is a creature of the banks. The stunned silence of the panel in response to Brendan Burgess’ comments during the program clearly showed that neither the public, the government, nor borrowers have confidence in the expert groups recommendations. Their “five year reprieve” strategy amounts to simple can-kicking and doesn’t deal with the underlying issue of unsustainable debt.

David Hall’s comments were reflective of the frustration and anger being felt by borrowers who are being mistreated by the predatory banks who lent to them. Stephen Donnelly brought up recent examples of egregious mistreatment of borrowers by the banks, but most telling of all was the following exchange between the presenter Richard Crowley, and the Minister

RC: “Minister, but do you really trust the banks to give people a fair deal on this?”

Minister: “No; And I don’t think anyone trusts banks at the moment…”

These are the words of a Cabinet Minister. It would seem that the banks have finally worn down the Government’s patience.

One thing was made very clear by the programme: the banks cannot be left in charge–as sole judges–of deciding which houses should be repossessed and which debts forgiven. They do not have the confidence of borrowers, of the public, or even of the Government. They have a track record of mismanagement, deceit, and are still being run by the same management teams who broke them and the country. They cannot be relied on in this matter, of all matters.

@ What Goes Up… Says:

Thanks!

I was thinking as much searched under “FG expert group etc. but could not find any. They are like versions of software hard to keep up with, but invariably very compatible with each other!

The reason people are appointed to these “expert groups” is that their expert opinions are totally predictable in advance.

Consequently, they are not to be taken too seriously. In any event they will be superseded by public opinion and mortgage defaults. They are only there to provide cover we all know the government have already decided to kick to touch. Again!

Anyone who’s ever done honest work knows smaller groups work best…anything much more than 6 people leads to co-ordination problems

Yet in Ireland we prevail with groups of 10-20, with rules:
1) Lots of civil servants: who presumably aren’t so good at their jobs if we need expert groups
2) Every interest group represented: that is only good if the aim is consensus…not any good for best advice. Worse still ‘celebrity’ types often make the cut
3) No pesky foreigners/true experts who may actually have deep experience with an issue that is novel in Ireland
4) Exceptionally verbose terms of reference, that the pesky Sir Humphreys will then use to kill any new ideas

Exceptions have been the recent Bord Snip (small and efficient), but mostly Expert groups/reports are kicks to touch

And when they’re not…the ‘interest groups’ still get them (e.g. eConveyancing report gathering dust since 2005 since a professional body knobbled it)

The problem is that there is never sufficient depth of talent in the Dáil to produce enough Cabinet Ministers good at public policy.

@ desmond brennan

The big committee has tremendous advantages in terms of preservingh the status quo. Individuals can be given a bit of status, but are unlikely to gel sufficiently as to become a nuisance. Stakeholders and vested interests can be accommodated. The agenda can easily be controlled by the chair.

There is plenty of talent in the Dail, but our primitive nature of our political and institutional culture has a stunting and cramping effect. Potential ministers have to juggle prior loyalties to their family dynasty, their local support base, their business, TU or cultural sponsor(s), and their party bigwigs. If they hadn’t played those cards right they would never have been considered ‘ministerial material’ in the first place.

The realpolitik of the profession and the party is always at work. A ministerial appointment can be viewed as an opportunity to contribute, or as a reward for past services rendered. The granting of a fiefdom. In the latter case, it would be naive to expect the public interest to get more than a nod.

@All

I just wonder is the time coming close to where a call for mass defaults will be the next issue. A Ryanair style advertisment campaign funded by Brendan O’Carroll perhaps given his latest exploits.

I can nearly predict what the ‘expert’ group will suggest.

Take the Version 1 report and suggest a quicker response to those in trouble. End report.

I find Brendan Burgess speaks with both sides his mouth – this is a guy whose financial services recruitment business (which he has now sold) depended utterly on the banks et al to pay him his way and no doubt many of his old chums are still in situ. The perceived lack of impartiality on his behalf becauase of his past associations with these institutions I find slightly at odds with his supposed consumer stance.

I’m assuming Mr Burgess will be a member of the ‘expert’ group. Jesus wept.

Looking at the Prime Time clip again.

Burgess: “can I deal with the debt for equity. People are throwing out these expressions, they clearly don’t understand what they mean. Debt for equity is used in the UK in situations where there is at least 25% of positive equity in the actual house. There is no debt for equity for people in negative equity and debt for equity used in this context in Ireland is another word for debt forgiveness. Now, if the government decides they want to do debt forgiveness, so be it. I don’t agree with that, I don’t think it is a good idea but let’s not call debt forgiveness, debt for equity to make it more palatable”.

Then Honohan: It may be possible to arrange that, even very stressed, owner-occupier borrowers who have to surrender ownership could stay in their house on a rental basis; and there could be intermediate shared equity type solutions,”

It is a mess, a real mess and the experts don’t know how to disguise the mess and disaster that is the Irish banking system without making it even worse.

@ Eamon Moran

How many people have already taken up residence in N.I. and UK? They could not afford the Irish solution to an Irish problem. The state has played a major role in all of this, while paying off foreign bondholders and a raft of incompetent’s including bankers, regulators, CBI governor, with gobs of money, simultaneously, forcing hundreds and eventually thousands of Irish people to take the scenic route to bankruptcy. Those that worked in the DoF, regulators office and CBI are almost all still in their jobs with more drafted in to help them. How these people are not in courts every day explaining their failures is testimony to the failure of the legal system and beyond belief? We must have the laziest solicitors and barristers on the planet or else it is just the’ old boys club’ playing itself out over and over.

Mortgages must be made non recourse. What are they waiting for? Also, mortgages that were drawn up under malfeasance and breaches of fiduciary responsibilities with grossly inflated valuations will have to be legislated for retrospectively these should also be non recourse. They are being forced to do this in the case of UORR’s which failed to recognise even the laws of physics. What a joke. The choice is do you keep legal debt servitude upward only contracts and pay out at the dole offices or do you amend contracts which were ‘illegal’ in the first place.

Look at what happened with the planners who allowed so many of the dodgy developments to be built? In many cases, for nothing more than development contributions, oblivious to the consequences later on. This was malfeasance and it has been openly admitted we saw it when councillors took back handers to rezone land. Have the legal profession followed this up? Why not?

The state needs to put the onus where it belonged and avoid bankrupting people, which is with, the regulatory authorities and banks themselves for failing to stress test or do proper risk analysis on houses and apartments, many of which could never have been built were it not for malfeasance and the most basic breaches of fiduciary responsibility. I have seen Olivia Green previously of Irish Nationwide, tell RTE that requests came in at 10am cheques (for more than what was requested) could be collected shortly after lunch and the paper work could be carried out at a later date. That was how we “ran” these financial institutions. That particular one costing us 4bn later on but they were all at it. When BoI wanted to expand its loan book by 100bn in 4 years, they should have made sure the bankruptcy laws in place.

@ RB

but then he is depending on these people for revenue streams so he would say that

You just can’t help personalising it can you?

Look debt for equity swap UK style is for people who can’t afford their mortgage but are sitting on untapped equity in their house, so there is a scheme for cashing in that equity to reduce the mortgage.

This is oh so not relevant to the Irish situation that I can understand Burgess’ frustration when that TD fella, sounding very knowledgable, suggests we adopt it. These sort of throw away pompous comments are raising totally unreal expectations and are quite irresponsible.

I will listen to the clip again to contextualise his “we should not be so fixated on keeping people in their existing homes”. To suggest that he means “turf them out on the street” and that he is saying this because he lost on bank shares is really letting yourself down.

@ RB: “The reason people are appointed to these “expert groups” is that their expert opinions are totally predictable in advance. ”

Quote of the Day. Lovely!

Brian Snr.

Am I the only person to think it’s slightly weird that the Minister for Agriculture, Fisheries and Food is on this panel, his cogent contribution aside.

Slightly off topic, but still part of the same broadcast, this Gardai retirement furore is simply nonsense. How many retirement age Gardai do we see walking the streets these days? From my own experience – living in Dublin 8 and walking to and from Dublin 2 every day of the week – I am confident to say the number is zero. Given that, and given that they have also signaled their intentions to retire six months in advance then all that is needed is a thorough handover / shadowing process. As to the numerous Garda stations across the country staffed by soon-to-be-pensionable Gardai, I would suggest that these posts are mainly sinecures and can be easily be filled internally by a significantly smaller number of personnel.

@niall d

“Slightly off topic, but still part of the same broadcast, this Gardai retirement furore is simply nonsense. How many retirement age Gardai do we see walking the streets these days? From my own experience – living in Dublin 8 and walking to and from Dublin 2 every day of the week – I am confident to say the number is zero”

You didn’t watch the programme very observantly did you.

The answer was given in it. They are all at the Garda training college being trained in preparing for retirement, I mean, be reasonable, you couldn’t expect them to be out on the streets because that way the would have to face the prospect of retirement without first having been paid to “prepare” for it.

It might be good enough for foreigners in their crappy little countries with their duff economic models to just have people retire, but not for wealthy, solvent Ireland.

FAS, the indisputably incompetent state training agency gives employees of the near-bankrupt state an extra 8 weeks vacation in their last two years at work to “adjust” to the concept of retirement.

http://www.timesonline.co.uk/tol/news/world/ireland/article7052647.ece

Quite right too. But hey, isn’t it handy that reporting and discussion in Irish media and blogs like this one is done in “our national language” that we efficiently allocate so much time, money and extra points 😉 to . Imagine if we communicated in one of those common as muck languages and the foreigners financing it all found out what clover sections of the Irish economy existed in. Them eeejits.

@ grumpy

“Don’t Cry for Me Argentina!”

Retirement at 50 and they can pick the best 3 years to benchmark the pension pot.

@ Robert Browne

On ‘malfeasance,’ statements of income were as dodgy as medical certs and how many deposits were paid by parents?

@ Michael Hennigan

“100% mortgages available here, here and hear, sign up today, take your first step to getting on the property latter”.

I wonder who is the prime mover and who were the accomplices? So far I have only seen one party to this debacle being punished? One person was signing up for a loan the other party was getting a commission, the higher the loan the more commission. No loan no property. No loan no commission it took two to tango.

Banks, insisted that one their own trusted panel of valuers signed off on valuation reports. The same ones that are now signing off on NAMA valuations and giving people the bad news about their ‘negative equity’. I predicted they would make more money from the bust that they did inflating the the boom. Every mortgage product was “regulated” by the financial regulator? So that fact that it was of offer meant that it had been checked out. Too many of those toxic things after all could cause problems.

BWII
‘Look debt for equity swap UK style is for people who can’t afford their mortgage but are sitting on untapped equity in their house, so there is a scheme for cashing in that equity to reduce the mortgage.

This is oh so not relevant to the Irish situation that I can understand Burgess’ frustration when that TD fella, sounding very knowledgable, suggests we adopt it. These sort of throw away pompous comments are raising totally unreal expectations and are quite irresponsible.’

I really think this line of argument is splitting hairs. Debt for equity swaps often involve equity shareholders being completely wiped out in which case there is no untapped / excess equity. Banks may cancel some or all of the mortgage debt and in return they take partial or full control of the house – that equates to a debt for equity swap.

I take it that the TD’s suggestion when referring to debt for equity swaps is that there is no further recourse to the mortgage holder for the cancelled debt.

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