That could translate into bad mortgage debts of at least €4.8 billion on the banks’ balance sheets, though the picture could be far worse if more people fall into arrears due to rises in mortgage interest rates and unemployment.
It is not exactly clear what Ryan has in mind, though there have been suggestions that banks might extend the term of the mortgages, reduce the interest rate or allow the borrower to sell the home back to the bank and lease it.
While these options may be favoured by the 26,000 hard pressed mortgage ac count holders in arrears, it is unclear how they will go down with the remaining 765,000 mortgage account holders meeting their mortgage repayments - or with the rest of the population, who don’t have any mortgage at all.
Any measures that the government took to ease the burden on mortgage holders would almost certainly reduce the banks’ cashflow and increase bad debts, resulting in the need for more capital from the taxpayer.
**The taxpayer has already stumped up €11 billion to recapitalise AIB, Bank of Ireland and Anglo Irish Bank. **Estimates vary, but brokers suggest that the banks would need a further €14 billion in new capital to replenish their balance sheets after the banks’ developments loans are transferred to the National Asset Management Agency (Nama).
The taxpayer is also expected to overpay for the Nama loans by €7 billion, based on the government’s original Nama proposals.
The taxpayer is also carrying the cost of the interest rates on the borrowings that the state is raising to fund the various capital injections.
In short, bailing out the banks on the development loans alone is already set to cost at least €31 billion.
This is before taking account of any new capital that may be required if Ryan insists on the banks going softly on mortgage holders who are in arrears.
It is true that losing your home is a far more emotive issue than losing on an investment in shares or taxi-plates; it is true, too, that there have been voices calling for a bailout for the little guy after the government proposed Nama to bail out the banks. But it is unclear whether this is a widely-held view, or whether a second bailout will make the first bailout right.
Certainly, vox-pops carried out by RTE and a number of letters to newspapers, following Ryan’s mortgage bailout proposal, indicate that many taxpayers are in no mood to fund the mortgages of their neighbours, as well as meeting their own obligations from pay packets already shrinking under the twin pressures of falling wages and rising taxes.
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