Banks have money for debt relief

Wednesday 05 December 2012 12.30
Noonan: Banks have to do more
Noonan: Banks have to do more

Finance minister Michael Noonan says the banks have funds to tackle mortgage defaults and proposals to tackle growing arrears will be ready by the end of September.

He was speaking to reporters ahead of the first cabinet meeting since the summer recess, held today.

“We’re aware of the difficulty for some time, but of course because we recapitalised, the capital is in the banks to allow the banks write off some of that debt,” Mr Noonan said.

“It’s a manageable problem, but it’s very onerous on certain individuals and the Government will deal with it.”

Mr Noonan said that additional measures were required to tackle the growing problem of loan defaults following Central Bank figures released this week that show 1 in 9 homeowners are in trouble.

Figures from the Central Bank yesterday showed that more than 55,000 mortgages were in arrears but another 40,000 are struggling to pay and have had their mortgages changed to interest only or made other arrangements with their banks to allow them keep up with payments.

The minister said proposals on how to tackle the issue would be ready by the end of September and noted that the banks had enough capital to write off some of the debt.

Mr Noonan said the last round of stress testing of the banks also tested mortgage debt - and this was one of the reasons so much capital was given to them.

The minister admitted that mortgage indebtedness was a pressing issue for a number of families and had to be dealt with at policy level.

Fianna Fáil's Finance Spokesperson Michael McGrath criticised what he called a "total lack of coherence within the Government" regarding debt forgiveness.

He said: "The Government needs to make a clear statement as to precisely where it stands on debt forgiveness and clear up the ever-growing confusion it has itself created."

Fine Gael and Labour ministers returned to Government Buildings for their first Cabinet meeting this morning following what was one of the shortest Government summer breaks in decades.

Among the issues to be discussed was the legislative programme for the forthcoming new Dáil term.

Ministers are expected to discuss the worsening situation of mortgage arrears and also the upcoming referendums on judicial pay and on giving Oireachtas committees the power to make findings of fact following the Abbeylara judgment.

Those referendums will be voted on in just under eight weeks' time, on the same day as the Presidential election.

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