Fianna Fáil Spokesperson on Environment and Local Government Barry Cowen has said he is extremely concerned that homeowners could be left on the hook for losses incurred in some local authorities which had development bonds held in IBRC.
He commented: “The liquidation of IRBC has had a number of consequences the government failed to plan for. The loss of development bonds held with the IRBC exposes unfinished housing estates and their residents to neglect as buildings will not be completed without the bond money to finance it. I called on the Minister for Finance today to clarify the scale of the problem, the number of local authorities affected across the country and what plans are in place to protect vulnerable homeowners.
“This issue arose after the Government moved to liquidate the bank overnight earlier this month. On February 26th Kerry County Council briefed their councillors on the impact that the wind up of the IRBC has had on bonds the council holds. The Council had lodged eight bonds with the IRBC, with six uncalled bonds lost in the sudden wind-up of the bank.”
“Throughout the country the bond system has been used to draw down finance to fund substantial remedial work on uncompleted estates and now it is unclear if other Local Authorities have lost Bonds lodged with IRBC and how much money has effectively gone up in smoke.
“The Labour Party was very quick to promise to burn bondholders in the banks but the reality is they have been paying back unsecured bonds since they took up office and the only bondholders they seem to have burned were the Credit Unions and the Local Authorities. A number of credit unions had fixed term deposits with the IBRC, which are now in jeopardy. Sources within the credit union movement have stated that losses could be as high as €17 million for credit unions around the country.
“I raised this issue a couple of weeks ago when it emerged that residents in Arklow were being pursued for costs relating to development bond. That issue is now subject to the courts but it’s clear that there is a genuine reason to fear that homeowners could be on the hook for losses incurred by local authorities. In the emergency IBRC legislation the Minister for Finance gave himself the power to make payments from IBRC in exceptional circumstances. In light of that Minister Noonan should be very conscious of the exposure the liquidation of IBRC has had on its staff, credit unions and local authorities.”
“Responding on this issue this evening Minister Brian Hayes was extremely dismissive and suggested those who’d been burned in IBRC had plenty of time to get out. This shows a distinct lack of disrespect for two pillars of our communities, our local authorities and our credit unions. They deserve better from the government.”