'Phoney' to say 20% in arrears are strategic
on 26/09/2013 00:00:00
And while he pulled back from criticising banks for including letters threatening legal action as "solution offers" to those who had fallen behind with mortgages, he warned that lenders were not acting quickly enough and were guilty of "wishful thinking".
Prof Honohan expressed concern that 75% of the 97,800 households in arrears of more than 90 days were not yet in an arrangement with the lender to resolve the problem.
Appearing before the Oireachtas Finance Committee, Prof Honohan was attacked by a number of TDs for not being firmer with the banks.
"We did not expect the banks to be so persistently ineffective in getting their arms around this problem and delivering sustainable solutions," he said.
"Despite all of our efforts, and despite real progress in policies, processes and staffing, far too many arrears cases have still remained untreated, whether sustainably or not."
He said banks had wrongly believed many cases would "cure themselves".
Quizzed on the revelations in the Anglo tapes and the Central Bank's decision not to file a statutory report to the authorities over their contents, he said there was "no smoking gun" and he "owed it to the public not to pretend we have sufficient new evidence of criminality".
Committee chairman Ciarán Lynch insisted Prof Honohan needed to be clearer on the Anglo tapes and state whether they contained new material or not.
Prof Honohan also denied he had "bounced" the country into the bailout in 2010, insisting he acted to protect the economy.
He said the Central Bank could not direct lending institutions on the issue of debt forgiveness.
He said legal letters sent by banks who claimed them as solution offers had led to a great deal of re-engagement with customers in arrears, as he noted that repossession would happen where a sustainable alternative was not available.
The Central Bank chief promised an audit of "solution offers" by the end of the year to see if institutions are providing realistic options.