THE OIREACHTAS FINANCE Committee has asked European Central Bank (ECB) president Mario Draghi to come to Ireland so he can discuss with them the European regulator’s role in the tracker mortgage scandal.
The committee’s chair John McGuinness told TheJournal.ie that he has written to Draghi and spoken to his office to emphasise the importance of an appearance by the ECB chief before them.
“We want to ask him if there is a supervisory role to provide independent oversight of the process and in particular the compensation part of that,” he said. “I’ve said to him: ‘Please come in and do your job’”.
Ireland’s Central Bank Deputy Governor Ed Sibley recently told the committee that the regulator had raised the issue at ECB meetings he had attended.
“The ECB is responsible overall for the supervision of the banking system within the eurozone. It is directly responsible for the prudential supervision of what are called the ‘significant’ banks, or the biggest banks operating in a particular country.
“The heads of teams that supervise banks, again from a prudential perspective, are employed by the ECB and the teams are staffed by both ECB staff and, in the case of Ireland, Central Bank staff,” Sibley said.
He also said the “authorisation and revocation of authorisations is a competency of the ECB and the Single Supervisory Mechanism now”.
Central Bank Governor Philip Lane said it has been observed that banks across Europe have “repeatedly shown themselves through various conduct scandals to be not serving consumers”.
“There is a legislative process and there are all sorts of European regulations and directives to try to improve the way financial services are provided to consumers. That is led by the European Parliament, the Commission and national frameworks. That is an ongoing trend to try to bring about improvement,” he told the committee earlier this month.
Softly, softly
This morning McGuinness said the committee hopes to speak with Draghi as soon as possible. It will also over the next few weeks be hearing from Taoiseach Leo Varadkar and Minister for Finance Paschal Donohoe, and has invited the Financial Services Ombudsman Ger Deering to speak to them on the issue.
He said the “softly, softly” approach adopted towards the banks on this issue thus far is not working.
“If Paschal was successful in his threatening strategy, you wouldn’t have had Bank of Ireland saying it is going to withhold trackers from members of its staff who are affected [by the scandal],” he said.
The bank has argued that these former and current employees should have been financially savvy enough to know what would happen.
“It’s outrageous,” McGuinness said.
Committee members, he said, are all on the same page on this – the tracker mortgage scandal has taken politics out of play.
Before the Christmas break, they will also be hearing from a number of groups about how the public banking model might work in Ireland, and submissions about allowing charities to purchase distressed loans to keep them out of the grasp of vulture funds.
“There now seems to be a willingness of ethical funding from America and Europe to fund the purchase of these loans from all of the main banks. The vehicle to do that would be a charitable status voluntary housing entity,” he said.
There is already a bill before the Houses of the Oireachtas that would facilitate this.
“The government now needs to remove all obstacles to allow an entity like this to be the purchaser of loans, with the consent of the mortgagee. Take the banks out of the equation, get rid of the loans from the banks, to the benefit of the individuals who are being traumatised by their activities.”
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