Report on the Dáil motion on the PTSB SVR

Here is my summary of last night:
(The transcript is now on KildareStreet.com )

Michael McGrath came across really well and I feel he highlighted our issue excellently. I noticed Brian Hayes nodding as if in agreement when Michael said some things like the fact the government missed the issue of the difference in the rates across banks when they pushed banks last year to pass on the ECB reduction.

I missed the name of the next speaker, I think he was from Limerick? He focused on SME's but ended with a good few points on PTSB - stating mortgage figures per month, etc.

Sean Fleming spoke mainly about SME's/arrears - he said he was a PTSB customer himself so did not feel like he could contributed unbiasedily to that debate but said he welcomed the motion as borrowers where under considerly strain as it was without additionaly interest rate payments.

Brian Hayes I found was very much saying the same thing as usual. He spent a good bit of speech stating all the good work the government have done with morgage interest relief, help for people in arrears, etc.. He went onto the interest rates towards the end but did not say that much, just that they were a commerical entity to which governments could not control.

Anthony Lawlor from Fine Gail spoke briefly after Brian Hayes - he highlighted again all the "good work" Fine Gael have done to help with mortgage arrears!

Next was Patrick O'Donovan, I did not find him that useful, he did not have alot of time but he spent most of it stating that the previous government got us in this position and it was funny now that they where looking for protection for customers of the banks that they let run wild in their government, etc...

Colm Keaveney for Labour was really good I thought. He said straight off that their was no point in blaming previous governments, that this was of no use to borrows who are struggling, that they just cared about now and needed a resolution for now. He welcomed the motion from Micheal McGrath and seemed quiet for it.

Marcella Corcoran Kennedy spoke very very briefly as they had run out of time - did not add much.

Why are they blaming it completely on tracker mortgages - AIB have a slightly higher percentage of tracker mortgages on their books but yet they do not charge their variable rate customers 5.18% to compensate!

kaza said:

Why are they blaming it completely on tracker mortgages - AIB have a slightly higher percentage of tracker mortgages on their books but yet they do not charge their variable rate customers 5.18% to compensate!

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AIB is a diverse bank with many ways of earning money.

PTSB is a small mortgage bank and the tracker issue affects them more.

The_Banker said:

AIB is a diverse bank with many ways of earning money.

PTSB is a small mortgage bank and the tracker issue affects them more.

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They use this argument but it's just not valid.

If they argue that the PTSB SVR borrowers should subsidise the losses on the trackers, you could argue that the AIB SVR borrowers should subsidise the losses on development loans which are far higher.

Brendan

Brendan Burgess said:

Where did Brian Hayes comment on this? Was it in the Dáil?

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Yes in the Dáil, it was covered in the late news on RTE 2 last night.

Here is my summary of the second part of the debate

The result
The FG amendment was carried by around 70 to 24.
The amended motion was then carried by the same amount.

Bad points

For the first ten minutes, there was no member of either Fine Gael or The Labour Party present. So the Sinn Féin and Independents were in effect talking to themselves.

After 10 minutes, Shane McEntee, a Junior Minister came in and remained there for the entire debate. Oddly enough he did not speak at all, other than to barrack the opposition when they spoke. He apologised to the Dáil for the fact that no one had been there at the start. But he pointed out that he had twice spoken to empty opposition benches.

The Minister for Health wandered in for about 5 minutes and then wandered off again. Apart from that, there was no cabinet minister there at any time. It's not that they did not speak. They didn't even show up for the vote.

Fergus O'Dowd, another Junior Minister, showed up for the last 45 minutes or so and he gave the government's response.

Fergus O'Dowd started off "The people will not forget that it was Fianna Fáil which was in government for 16 of the last 20 years" and said nothing at all other than it is not the role of the government or the Central Bank to set interest rates.

Good bits

A Fine Gael TD, Aine Collins said " When the trackers are moved, the argument that the high standard variable rate is needed to compensate for them will no longer be justified. As part of the deal to take the trackers, it must be a condition that the SVR is reduced"

From the chat in the bar afterwards, it seems that PTSB are telling the government, "We won't reduce the SVR unless you take the trackers off our hands".

So it does seem as if the PTSB SVR will be reduced in a few months' time.

While only one journalist was present, Michael O'Regan from the Irish Times, he got a good story "[broken link removed]
He left immediately after the row to file his report, so he missed the debate.

There were 13 of us in the Visitors' Gallery. Gigantic Lamb bringing three other borrowers was a huge assistance. If we all could do that, we would have a campaign.

The Fine Gael and Labour TDs were genuinely defensive and embarrassed about this. They know it's wrong. They can't explain it or understand it, so for the most part, they spoke about other issues such as arrears generally and what the government is doing to help people in arrears.

Derek Nolan (Labour, Galway West) welcomed the FF motion. He said that it was sensible and not unreasonable.

Joe McHugh of Fine Gael, after attacking FF's record, welcomed constructive dialogue. I found him difficult to follow, so I wasn't sure what he was actually saying. It sounded positive.

Michael McGrath told me afterwards that, yesterday, he received over 100 emails from around the country. I have asked him to email them a link to this forum. We all discussed in the bar afterwards why so few SVR borrowers are doing anything about it.

Quotes from the debate - read the full transcript on KildareStreet.com

Derek Nolan, Labour

The three elements the motion calling on the Government to use its influence on Permanent TSB, to measure the new lending performance of the banks and to set out an implementation strategy seem very sensible. While I will support the Government amendment, I call on the Government to take into account those three actions and to act on them. They are not unreasonable or counterproductive and they have merit.

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Aine Collins (Cork North West, Fine Gael)

The Government in conjunction with the troika is currently looking at a way to deal with the tracker mortgages, in particular those held by PTSB. In the event of tracker mortgages being transferred from PTSB and other State controlled banks the argument for maintaining a high variable rate in PTSB would no longer be justified. If, as the Minister said, the Government is pursuing this course of action, part of the deal should be a reduction in PTSB’s variable rate to the same level as AIB.

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Fergus O'Dowd Minister of State

On the issue of the standard variable rate charged by PTSB, it should be noted that mortgage rates generally are rising to reflect the increased costs of funding being incurred by all banks. The higher cost of funding is being driven primarily through the increased cost of wholesale funding and high deposit rates, which are beneficial for consumers. As banks reduce their dependence on ECB funding, as they should do, the cost of funding naturally increases.
While we sympathise with the impact of the higher PTSB rates on consumers, it is important to reflect on the facts of the situation. The average standard variable rate loan in PTSB, including buy-to-let mortgages, is €82,600. The average tracker mortgage is far higher and these borrowers are currently paying historically low rates. The banks have to strike an appropriate balance between operating a viable, commercial bank which can make a return for the taxpayer on its substantial investment and meeting the needs of consumers. In arriving at their decisions, the banks have to take into account their ability to operate a business which can ultimately sustain itself without the need for taxpayer support. The taxpayer has already had to pay far too much to support banks. This is not sustainable as the taxpayer has to fund public services to those most in need in our society, namely the elderly, the unemployed and the disadvantaged.


Neither the Central Bank nor the Department of Finance has a statutory function in regard to interest rate decisions made by banks. The Deputy Governor of the Central Bank has stated to the Government that, within its existing powers and through the use of suasion, the Central Bank will engage with specific lenders which appear to have standard variable rates set disproportionate to their cost of funds. Within this framework, we will continue to work with PTSB on the development of its future plans.

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That is appalling and shows the apathy of the Government to our situation.

What happens to the vote if neither of the Government parties showed up to participate in it then?

A bit more of Fergus O'Dowd's speech ( I will get the full transcript later)

Mortgage rates generally are rising.

High deposit rates are beneficial for the depositors

While he sympathises with the PTSB SVR borrowers, we must remember that the average balance on these mortgages is only €82,600

Banks must strike a balance

The Fianna Fáil speakers were well informed on the issue and dealt with all the arguments. They also spoke very well which is maybe due to the fact that there are no new FF TDs so the ones left all had a lot of experience.

Robert Troy was so well informed about the history of interest rate movements, that he must have read my Key Post on the topic.

John Mc Guinness spoke superbly without notes. He called for the SVR to be reduced and for the reduction to be backdated.

Willie O'Dea entertained us all with a history of English literature.

Timothy Dooley and Brendan reiterated the main points.

Séamus Kirk made the point very well that "Cost of funds is not the issue" as new customers are being given mortgages at 3.7%.

Michael McGrath then wrapped up summarising all the main points. At the end before the vote, there was one Labour Party TD present (Kevin Humphries who had signed me in for the evening), Fergus O'Dowd and Shane McEntee the Junior Ministers, and perhaps 5 other FG TDS. There were around 15 TDs on the opposition benches.

I am enraged every time I see that 80k or 90k figure as the average value of the SVR loans!

They should be forced to re-do their statistics and see what the average is for the boom time buyers.....

That would dramatically increase if they took only the loans taken out from 2004 - 2009 for example.

The transcript of the first night's debate is on KildareStreet.com

Last night's should be available later today.

I have asked Brian Hayes to advise where the €90k figure came from especially as it was €66k last year, he has agreed!

Mortgage debate row as Government goes missing



Michael O'Regan reports on the debate in today's [broken link removed]

OPPOSITION TDs sought an adjournment of the Dáil last night because no Government Minister or TD was present during a debate on mortgages.
The absence of a single TD from either Government party is believed to be unprecedented in recent decades.


The Dáil was debating a Fianna Fáil Private Member’s motion dealing with the “unjustifiably” high standard variable interest rate charged by Permanent TSB on its residential mortgages, the ongoing lack of credit for small and medium-sized enterprises and the escalating problem of mortgage arrears.


...



Fianna Fáil finance spokesman Michael McGrath said it was “an absolutely outrageous scenario”, adding that it was a measurement of the Government’s abandonment, not just of the PTSB customers but of all distressed mortgage holders.


This remark prompted applause from the public gallery.

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This remark prompted applause from the public gallery.

George - I had asked you to behave with some decorum

The Journal.ie has a picture of the empty benches.

Is it possible to get a list of exactly what TD's were present for the motion and debate?

Also have to agree with Swauna where they get this figure of
90K - even so it still does not give them they right to charge SVR over and above.

Angela59

Well if they want to insist on using a €90k figure let them! We need to calculate what interest is payable on an annual basis by 80,000 people who owe €90,000 and say are half way through a 25 year mortgage. My guess is their interest bill would be quite small realtively speaking and in no way could restore PTSB's balance sheet. This would prove that charging 5.19% is not for the "greater good", it is simply punishing a few for very little gain relatively speaking.

They claim 80,000 mortgages at €90,000 each ( although 80,000 seems too high to me)

2.2% of 90,000 is around €2,000 each .

80,000 borrowers would mean an additional profit of €160m for PTSB

angela59 said:

Is it possible to get a list of exactly what TD's were present for the motion and debate?



Angela59

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No. But when the transcript is published, you can see who spoke.

The only person there for the entirety of the debate was Michael McGrath. Shane McEntee came in after around 15 minutes and stayed for the remainder.

The FF speakers were last to speak and they came in for the last half of the debate.

The FG and Labour TDs came in, spoke, and mainly left again.

Brendan

Sorry I wasn't there last night, but I am still confused as to what exactly the motion was? I understand what they all talked about, etc. but what exactly was the motion to be voted on?

This is the FF Motion

And this is the Government amendment

....

[FONT="]— neither the Central Bank nor the Department of Finance has a statutory function in relation to interest rate decisions made by individual lending institutions at any particular time; and[/FONT]

[FONT="]— Permanent TSB did pass on, in full, the European Central Bank rate reductions in late[/FONT]
[FONT="]2011 to customers holding standard variable rate (SVR) mortgages and reduced[/FONT]

[FONT="]
[/FONT] [FONT="]f[/FONT][FONT="]urther their loan-to-value standard variable rates to align them with the SVR;[/FONT]

[FONT="]acknowledges that the pricing of financial products, including standard variable mortgage interest rates, is a commercial decision for the management team and Board of each bank, having due regard to their customers and the impact on profitability, particularly where the cost of funding to each bank, including deposit pricing, is under pressure;[/FONT]

[FONT="]acknowledges that the pricing of financial products, including standard variable mortgage interest rates, is a commercial decision for the management team and Board of each bank, having due regard to their customers and the impact on profitability, particularly where the cost of funding to each bank, including deposit pricing, is under pressure;[/FONT]

[FONT="]notes that the Central Bank has not requested the power to have regulatory control over the setting of retail interest rates and rather proposes that, within its existing powers and through the use of suasion, it will engage with specific lenders which appear to have standard variable rates set disproportionate to their cost of funds;[/FONT]

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It called for no action by the government in relation to PTSB.