Government rules out widespread debt forgiveness
The Government has today ruled out widespread debt forgiveness for struggling borrowers in the face of a High Court warning that banks are hounding their own customers to suicide.
Taoiseach Enda Kenny and several Cabinet ministers rushed to defend the coalition's response to the personal debt crisis after the startling intervention by one of the country's top court officials.
Master of the High Court Edmund Honohan, a brother of the Central Bank governor Patrick Honohan, accused lenders who were "cheerleaders for the Celtic Tiger" of pursuing debtors to the bitter end.
Mr Honohan - who has watched a surge in mortgage, credit card and personal debt cases before the High Court - said it was "quite silly" that bailed out banks were still going after bad debts that had already been refunded.
"There are people coming to court before me who are desperate because they are being sued for a debt that has already been written off," he said.
"In the case of banks which have been recapitalised the taxpayer has actually refunded the money to the bank."
People coming before the courts included the widows of debtors who had killed themselves because they believed their problems were insurmountable, he said.
The Irish Banking Federation described the language as inflammatory and insisted lenders were working hard to avoid home repossessions.
Mr Honohan said part of the problem was bank lawyers weren't speaking to bank accountants, while no one in the Department of Finance knew the law and no one in the Department of Justice knew economics.
Demanding a level of debt forgiveness for those who can't repay their debts, he said measures could be brought in within a month - at the stroke of a pen - to clear up the "debris" cluttering the courts and restore hope to desperate borrowers that there was some life ahead.
However, Enterprise, Jobs and Innovation Minister Richard Bruton poured cold water on the suggestion.
"Ultimately the relationship between banks and individual borrowers is something they have to work through and they have to make decisions on those," he said.
"There is a genuine issue about moral hazard, you can't be writing off one person's debt and expect another person to pay their debt."
Mr Kenny has said the government is working on a range of initiatives to avoid home repossessions while Tánaiste Eamon Gilmore said urgent interim measures will be introduced as soon as possible, ahead of next year's Personal Insolvency Bill.
"We are very concerned about the difficulties in which mortgage holders find themselves when these matters are brought before the courts," he said.
Separately, a backbench Labour TD broke ranks with his party to launch a blistering broadside on their senior coalition partners Fine Gael's stewardship of the economy.
Tommy Broughan said without the banking debts the country would be well on its way to balancing the public books and would return to fiscal independence within a relatively short time.
"Taoiseach Kenny however, with all the insouciance of the captain of the Titanic, continues towards the iceberg of national bankruptcy and ruin," he said.
"Like that captain .. the Taoiseach and the Minister for Finance (Michael Noonan) are still turning the tiller in absolutely the wrong direction."
Mr Broughan called for a fundamental restructuring of the EU/IMF rescue package, burden sharing with the European Central Bank and bondholders and for fairer taxes targeting the wealthy elite.
