Carthy sounds alarm on EU proposal on vulture funds
Sinn Féin MEP for Midlands North-West, Matt Carthy, has confirmed that he will be writing to civic society bodies including farmers groups, consumer rights organisations, trade unions and housing campaigners to raise the alarm regarding a proposed EU Directive that will give free rein to vulture funds across the EU.
The MEP’s letter outlines the serious threat to the rights of borrowers and consumers arising from the proposal, which aims to develop a secondary market for non-performing loans, (the ‘proposal for an EU Directive on credit servicers, credit purchasers and the recovery of collateral’).
Carthy said: “This proposed EU Directive is designed to promote the use of vulture funds and securitisation vehicles in order to move this bad debt off the banks’ balance sheets and into the opaque and unregulated shadow banking sector.
“This proposal will also empower banks to seize their customers’ property through an out-of-court recovery mechanism, and will result in borrowers, including mortgage-holders, being pursued more aggressively by vulture funds and debt collectors.
“This EU proposal is nothing less than a second bailout for the banks. The non-performing loan problem was not caused by ordinary people and they should not be forced to bear the brunt of resolving it. The real goal of this proposal is not to ensure banks lend again but to ensure they return to making massive profits again.
“The debt vultures will be encouraged to spread their wings and move from just operating in Ireland and Spain to operating across the EU, while securitisation will be promoted as a so-called solution to the non-performing loan problem. A private equity fund will be able to register in one member state and get a ‘passport’ to operate in any EU state, while only being bound by the regulations in place in the state where it is registered.
“The worst part of this proposal is that it will put major restrictions on all future attempts to regulate vulture funds at the Irish level. Our hands will be tied behind our backs. Unless new domestic laws comply with the EU Directive – which, let’s not forget, is designed to promote the sale of debt to vulture funds – the legislation will be struck down because it will amount to an infringement of the ‘right of establishment’ or ‘right to provide services’ of these private equity funds.
“The Commission has clearly not taken consumer protection issues or fundamental rights into consideration when conducting its impact assessment for this proposed Directive. The Directive should be withdrawn, and I am investigating possibilities for legal action in this regard. The European Parliament must block this proposal from becoming law.
“I will be organising an EU-wide campaign against this Directive in the coming months, together with other progressive forces and consumer protection organisations.” ENDS