Carthy: European Parliament has unique opportunity to stop the vultures
Sinn Féin MEP Matt Carthy has been appointed as negotiator for the GUE/NGL political group in the European Parliament on the Commission’s proposal on common rules for banks across the EU to reduce their stocks of non-performing loans. He is working together with MEPs from other political groups to try to ensure that the Parliament adopts a position that tackles the sale of mortgages to vulture funds and protects consumers and mortgage-holders.
Speaking from Strasbourg, Carthy, a member of the Economic and Monetary Affairs Committee, said: “This proposal provides us with a unique opportunity to enact rules at the EU level that will protect consumers, protect the rights of mortgage-holders, and stop the sale of portfolios of non-performing loans [NPLs] to vulture funds.
“It will require strong political will from all of the main political groups if the Parliament is to adopt the most progressive position possible before entering negotiations with the Council and the Commission. The ECB and the national Central Banks have completely failed to protect the rights of consumers and mortgage-holders, so MEPs need to do better.
“My top priority in the negotiations on this package will be to restrict the sale by banks of NPLs to vulture funds. We’ve seen the toxic impact of the vultures in Ireland, the way in which they have contributed to the housing and homelessness crises, and the government’s ineffective and half-hearted attempt to regulate these funds.
“To date, banks in EU member states have largely been left to their own devices or – when it comes to the largest banks, under the supervision of the Single Supervisory Mechanism [SSM] – pushed by the ECB’s Guidelines to reduce their stock of bad loans by whatever means necessary.
“I have repeatedly questioned the SSM as to their exact instructions to Irish banks regarding NPLs, and the ECB representatives have consistently denied pressuring the banks to sell to vultures. But the ECB always relies on the SSM’s limited mandate of ensuring financial stability, and passes the buck on consumer protection back to the national Central Banks.
“We’ve had enough of these games. We need strong and effective consumer protection now. The co-legislators in the EU have a far broader mandate than the ECB to ensure consumer protection so this is a unique opportunity to ensure the rights of mortgage-holders are upheld at EU level.
“The problem is that the ECB, together with the Commission, are dedicated to a very limited suite of options to reduce the stock of NPLs. The most significant so-called solution pursued by the Commission in this proposal, and by the ECB, is the promotion of securitisation – the bundling up of various types of debt which is then packaged in a product that can be trade on. Securitisation was one of the principle causes of the global financial crisis. Pooling bad debt and trading on it will only increase the risk to financial stability – it is not a genuine solution to the NPL problem.
“MEPs need to make significant changes to the Commission’s proposal by removing the promotion of securitisation, ensuring the restriction of sales of bad loans to vulture funds, and ruling out future public bailouts of bad debt. At the EU level, we need to legislate to ensure that borrowers have the legal right to refuse that their loans be sold on to another institution.
“I will be working with MEPs from across the political spectrum in the coming weeks and months in order to campaign for the European Parliament to ensure banks are restricted from selling their loans to vultures and that consumers are protected. As a first step I will be co-hosting a forum for MEPs and the public later this month in Brussels featuring speakers on this topic from Finance Watch and BEUC, the EU consumer rights organisation.” ENDS