Yesterday, the head of banking regulation at the Central Bank, Ms Fiona Muldoon, made a very frank and honest statement in which she outlined what was not being done about the mortgage crisis. We have raised this issue on a continual basis for the past 18 months. Yesterday, it was confirmed that half of the 168,000 owner-occupier mortgage holders in arrears have no formal arrangement in place and the losses already incurred have not even begun to be cleaned up. It was revealed for the first time that 48,000 buy-to-let mortgage holders who are €13 billion in debt are in financial difficulty, and the banks were berated for not acting on the issue. Ms Muldoon called for urgent action and condemned what she saw as bankers behaving like unruly teenagers in dealing with the mortgage debt crisis. She stated there was a lack of urgency of purpose in dealing with the mortgage arrears crisis and that the banks needed to get busy fixing the issue. The Central Bank was very robust in its comments yesterday and was far more assertive than the Taoiseach has been on this issue. Last week, I raised the issue of AIB raising its standard variable mortgage interest rates and the Taoiseach defended the bank and stated he could not intervene.

In addition to Ms Fiona Muldoon's comments, the Secretary General of the Department of Finance stated very clearly a much more dramatic write-off of debt was required in respect of households in unsustainable situations and unable to pay. It took a civil servant to say what the Government has refused to say on debt forgiveness for the past two years. It raises fundamental questions about Government policy. What is Government policy on debt forgiveness? With regard to the Personal Insolvency Bill, the Taoiseach proposed the unruly teenagers would have a veto on mortgage debt and the resolution of household debt. It is time the Taoiseach re-examined the Bill and took on board the suggestion we put forward in the Debt Settlement and Mortgage Resolution Office Bill tabled by Deputy Michael McGrath, which would create an independent objective arbitrator to resolve debt issues between customers and banks. By any yardstick the performance of banks to date can give no one any confidence they will deal adequately, properly or in a sustainable way with customers and people experiencing pain because of the scale of mortgage arrears they are in.

Last week, at a Dublin Chamber of Commerce function, I stated publicly there was no demonstrable evidence of a functioning banking system in the country and that the banks were not doing enough. Deputy Martin is only too well aware that the Government had to restructure and recapitalise the banks, change the boards and remove the perks. The Government has had regular meetings with the banks through the Economic Management Council. The regulator requires the banks to submit to the Central Bank their forbearance schemes to deal with mortgages and persons in distress covering a range of issues from mortgage to lease, mortgage to let, mortgage to rent and split mortgages. It is a fact that the Government would like the banks to sit down and conclude arrangements in every case on a bilateral basis. This facility is there and the banks have been advised, encouraged and pressurised to do so. I wrote to the regulator last year and advised him that if he needed further powers to act with regard to the banks, the Government would give him those powers. The regulator replied that he did not at that stage require further powers.

The Deputy is incorrect to say it was a public servant who first mentioned debt write-off. The Minister for Justice and Equality on Committee Stage of the Personal Insolvency Bill made this very point. I note the points made by Ms Muldoon and the Secretary General, Mr. Moran, and the comments of the Governor of the Central Bank. The message to the banks is that they are in a position to sit down and negotiate on a range of areas with persons with personal debt, in mortgage distress or in arrears. The personal insolvency legislation will be in operation by 1 March which means if banks do not settle on a bilateral basis with their clients, these clients will have recourse to new measures to reach agreement on their problems through the insolvency agency. The legislation will allow for debt write-down. Banks have an opportunity. They have been recapitalised and they have been well advised to sit down on a bilateral basis with their clients and I hope they do so. What the public servants said yesterday follows what the Government has been saying for quite some time. It is time to move and demonstrate that their powers, the range of the facilities under the code of conduct and recapitalisation mean they have the capacity to sit down with every individual and work out an individual solution. If they do not do this, the insolvency system will kick in on 1 March.

They are not doing that. That is the point. The Taoiseach's response is that the Government would like the banks to sit down with their customers but they are not doing so. That is what Fiona Muldoon, the head of banking regulation at the Central Bank, and the Secretary General of the Department of Finance clearly said yesterday. The Taoiseach wrote last year to the regulator and notes what the head of banking regulation and the Secretary General have to say but we have gone beyond noting. Does he agree with what they have to say? Does it not call for a fundamental change of direction and a change in the orthodox approach to banks to date, which is a non-interventionist orthodoxy, articulated by the Taoiseach last week when he said he could not intervene? Given what we are hearing, the regulator is barking very loudly and the Taoiseach is not listening to what is being said. Particularly in the context of personal insolvency, he proposes to give the very people about whom he has just spoken the veto in terms of resolving household debt. That is the point. How could he have confidence in the banking leadership, or lack thereof as articulated by the head of banking regulation? How can he trust that establishment to fairly, objectively and resolutely deal with an issue that is causing immense pain to hundreds of thousands of families across the country when it is making no sustainable effort to deal with it?

Fianna Fáil trusted them.

As a follow-on, it is causing immense damage to and is a huge drag on the domestic economy.

One would swear Fianna Fáil had nothing to do with it.

It is time for action and to change the orthodoxy of the Taoiseach's approach which has not worked to date. It is not I who is saying it has not worked but the Secretary General of the Department of Finance and the head of banking regulation. I ask the Taoiseach to look again at the Personal Insolvency Bill 2012 and to remove the veto he proposes to give banks in terms of resolving household debt.

Fianna Fáil revered the bankers four years ago.

The banks have been given no veto. Committee Stage of the Personal Insolvency Bill was completed in September. As Deputy Martin is aware, the personal insolvency arrangements constitute a mechanism to arrive at a resolution in every case - in appropriate circumstances, debt forgiveness or write-down. If the banks do not sit down with their clients, the client will by law be given the opportunity to go through the insolvency arrangements which, as we know, is complex legislation but which will be in operation from 1 March 2013. Everybody knows the pressure people are under. Quite a number of mortgages have been restructured or rearranged but not enough is being done. This is why the Central Bank required the banks to submit to it what they proposed to do on a timeline basis by September. So they had better do so because the insolvency legislation is moving through the Dáil and will be operative from 1 March.

They are not afraid of the Bill.

They are happy with the Bill.

There is no veto in the legislation, which allows for debt write-down or forgiveness.

It gives banks a veto.

The banks are forewarned that clients have the opportunity to go through the insolvency arrangements if the banks do not sit down and reach a conclusion. Deputy Martin is wrong in his assertions.

Members of the Government did not see it coming either. They were buying properties madly at the time.