WHEN historians chronicle the life and times of Enda Kenny, a question they’ll ask is why he did nothing to help thousands of ordinary homeowners who find themselves in mortgage arrears as a consequence of an economic crisis not of their making, and who now face repossession of their homes.
Importantly, they’ll want to know his reasons for encouraging US vulture funds to feed avariciously upon the misfortune of such people.
Vulture funds are private equity firms and hedge funds that have a single-minded purpose: to make outlandish profits at the expense of victims of the bust Celtic Tiger. At a huge discount they purchase bank debts from NAMA and the IBRC and benefit by pushing up yields on Irish property.
They include outfits such as Cerebus, Lone Star Capital, Blackstone, Oaktree Capital, Starwood Capital, and the Fine Gael favourite, Goldman Sachs.
So far, Kenny’s only explanation for welcoming the vultures is that they contribute to a strong inflow of foreign capital. Which is true.
The website Journal.ie reported that on March 4th, 2015 Kenny’s Department of Finance organised a conference to facilitate vulture funds ‘at which figures from the Irish property industry would “network” with private equity firms and other global financial players.’
The Department of Finance met with fund managers on 65 occasions between 2013 and 2014, and Kenny privately met with Blackstone in late 2011. The Minister for Finance, Michael Noonan, met with Lone Star capital three times and with Apollo capital twice in 2013 and 2014.
In contrast, the government spoke to groups advocating on behalf of mortgage holders just five times!
Vulture funds currently possess up to 90,000 Irish loans. The Irish Nationwide Building Society, Bank of Scotland, Bank of Ireland and Ulster Bank originally owned many of the loans before they chose to off-load them, via Nama, to the American pedlars.
With regard to ‘distressed’ mortgages, US predators now possess 47,000 of them (the exact number is unknown as vulture funds are not regulated by the Central Bank). In other words, instead of trying to work out a system to protect Irish homes in grave danger of repossession, Kenny has helped fuel a mortgage crisis that may yet result in mass evictions.
In the old days, banks sought an accommodation with borrowers in financial difficulties, but vulture funds have no social conscience, no sense of obligation and no notion of compassion or civic duty. They are not interested in the long term.
Driven by a mania to make handsome profits, they are indifferent to the suffering they inflict on thousands of Irish families.
Evictions the order
As in America, the asset management strategy of these buckos is to squeeze the debtor who can’t produce immediately the spondulox to pay the mortgage or loan. Court proceedings, evictions and repossessions become the order of the day.
Thanks to Kenny, who invited these primitive vulgarians to our shores, we are in for a dose of brutal American-style capitalism, the likes of which is alien to traditional Irish humaneness and compassion.
And although people are stunned at what is taking place, the story gets worse. For instance last month the Irish Examiner reported that Social Democrat TD Stephen Donnelly claimed in the Dáil that a US vulture fund had set up an Irish subsidiary, Mars Capital, to avoid paying taxes in Ireland on its huge Irish profits.
(In fact, Permanent TSB sold its subprime mortgage book to Mars Capital Ireland, a fund linked to giant hedge fund Oaktree Capital).
‘I believe,’ said Donnelly, speaking under Dáil privilege, ‘these vulture funds are about to pull off the largest avoidance of tax on Irish profits in the history of the State. The scale is likely to be in the tens of billions of euro in missed taxes.’
This is how De Paper carried his comments: ‘Mars Capital, a mortgage company, was owned by a registered charity, the Matheson Foundation. The charity’s mission was to help Irish children to “fulfill their potential.” It also contributed to causes such as the Irish Society for the Prevention of Cruelty to Children, Bernardos, and Temple Street Children’s University Hospital.
‘The company, through the charity, was not paying tax on its profits here under a corporation tax loophole called Section 110, said Mr Donnelly. In one year, it had paid a total €250 on profits of €14m, made from buying up distressed mortgages.
‘He went on to say that he understood almost all of the vulture funds whose profits are generated in Ireland have section 110 status. How big is the scale of the tax avoidance by these vulture funds?’ he asked.
In response, Tánaiste Frances Fitzgerald said officials from the Department of Finance were currently examining ‘the use of certain physical vehicles for property investments.’ If necessary, ‘appropriate action, including legislative action, would be taken,’ she said.
It’s all somewhat stomach churning, in view of the fact that the mortgage calamity is in its infancy and worse is to come. According to Focus Ireland, an organisation that helps homeless families and children across the country, already there are 5,344 vulture fund-owned homes in Cork.
More than 13,000 properties in Dublin are owned by vulture funds, with 2,500 properties in Galway in the hands of the predators.
Focus Ireland is not happy with the way the Department of Finance regulates the vultures and has called on Kenny and his government to stop their influx into this country.
It points to the controversy in Tyrrelstown, Co Dublin, where a Goldman Sachs vulture fund bought an entire apartment complex and attempted to evict all the tenants –sixty families!
Ironically, and no doubt to the delight of the vulture funds, the demand for housing is far outstripping supply. At the same time, rent inflation shows no sign of slowing down.
Rents in Dublin are now higher than at the peak of the Celtic Tiger, leading to a spike in homelessness (average cost of renting a double room in the city centre is €682, while a house will cost a rentee at least €1,500 a month – sums that are unaffordable for many tenants).
Yet, if the will existed among Blueshirts, something could be done: such as the regulation of rent increases. In Berlin, for instance, special rent-control legislation curbed the fastest-rising rents in Europe.
The city prohibited landlords from charging more than 10% above local average rents.
Berliners argue that keeping the city affordable for lower-income residents takes precedence. They want to prevent a situation whereby people on low incomes are obliged to live in the suburbs while the centre becomes the haunt of the super rich.
Berlin is succeeding in its plan. But, predictably, Enda Kenny and chums have no plan. Absolutely nothing, except to be party to misery as the rampant exploitation of Irish families continues unabated!