Reports this morning that the banks will not reduce the variable interest rate on mortgages make for disturbing reading. As the Tánaiste is well aware, there are over 300,000 variable rate mortgage holders in Ireland paying, on average, 2% higher than anywhere else in Europe. That is an extra €4,000 per year that is putting an intolerable burden on many families. If this is not addressed, it will lead to more home owners finding themselves in arrears.

There is a German group of MPs who have been visiting the Houses for the past two days and they are in the Visitors Gallery at the moment. They are members of the Friends of Ireland in the Bundestag and I had the pleasure of meeting them this morning. It would not be an overestimation to say they are somewhat amazed that mortgage holders here are paying 4.5% in interest, as opposed to 2% in Germany. The Minister for Finance, Deputy Noonan, met the Governor of the Central Bank on behalf of the Government and expressed its concern at a routine meeting approximately one month ago. The Governor indicated he would prepare a report by June. At the time, the Tánaiste said she believed a levy should be placed on banks if they did not address or reduce the variable interest rates.

Representatives of AIB have come before the finance committee and offered a cut of 0.25%. That is something but it is by no means enough when one considers the extent to which banks are gouging mortgage holders, as the amount they take is well above the cost of funding. Representatives of PTSB were before the finance committee yesterday and, notwithstanding the wishes and views of members of the committee, they retorted with standard banking language, obfuscated their responsibility to the taxpayer and mortgage holders and refused to accept that they were rebuilding their balance sheets on the backs of the 70,000 mortgage holders that they have on their books with a variable interest rate.

Today it is reported that all the Governor of the Central Bank can say to the banks is that it is advisable to reduce the variable rates to head off any political response on the issue. That is a rather weak response from the Governor, who is somebody I respect. It is not the full extent to which the matter should be addressed.

A question, please, Deputy.

Surely the banks have got the message at this stage if the Government is expressing its message in the way we would have thought. Clearly, they believe this is a cotton wool exercise in the Government's approach and that it is taking a "softly softly" approach. Does the Tánaiste firmly believe the banks should reduce the variable interest rate? Will she address the issue today? Just as importantly, if she believes there should be a reduction, what will the Government do about it? Is it just a matter of waiting until June for the report from the Governor or will the Government address the issue by imposing a levy on the banks? They have been given adequate time and they know the concerns - they are real - of the Government. They certainly know the concerns of this side of the House. Will the Tánaiste move quickly to address this matter and make it very clear to the banks that they either act now or the Government will impose a levy on them?

I welcome our friends from the Bundestag in Germany. We had a banking collapse, which people know happened on the watch of the Deputy's party and cost the country much money. We are in the process of recovering much of that. Nonetheless, a strong element in the portfolio of lending built up by the banks comprises tracker mortgages on which the banks are losing money. Part of the action of banks in their charges for standard variable rate mortgages is to seek to recover, as the Deputy suggested, costs from the losses incurred with respect to tracker mortgages. No doubt, there may yet be action that could be taken within a European context, with the agreement of our German friends, with regard to the tracker mortgage issue that could provide some relief into the Irish banking system. That is a wider issue and not the subject of the question.

The standard variable rate mortgage rates are excessive in terms of cost and I have said that on a number of occasions. In recent days, the Minister for Finance and the Governor of the Central Bank have met on mortgage issues. I understand that at their meeting, the issue of mortgage interest rates was discussed. There are issues for the banks both with respect to tracker and standard variable rate mortgages. The Governor provided an update to the Minister on the ongoing research that he and his officials are carrying out on the issue of the standard variable rate charges. The Governor and the Minister noted that the standard variable rates charged in Ireland are higher than other euro area countries and have not fallen in line with European Central Bank wholesale rates.

The Central Bank has submitted its research to the Department of Finance and it is expected to be dealt with in the next few days. The Minister, Deputy Noonan, and his officials will review the research ahead of meeting representatives of the six main mortgage lenders in the coming weeks. I have advised the main banks that they need to consider their pricing policies with respect to standard variable rate mortgage holders. If they are not inclined to listen to the difficulties that people are facing as a consequence of their pricing policies, there are other mechanisms of addressing this.

I have referenced that before. Given that the Irish taxpayer bailed them out for extraordinary amounts following Fianna Fáil's actions, the banks would be wise to listen to the advice in relation to their pricing policies and to provide better deals for their customers.

Sure, they are not listening.

However, they do have a problem in relation to tracker mortgages and anyone who looks at the issue must consider all of the problems faced by the banks.

I thank the Tánaiste for her reply and for the history lesson on the economy and how it got there.

There was no harm in that.

Maybe we can look at a little bit of recent history.

It is Frankfurt's way.

It was in case Deputy Dooley was suffering from amnesia.

I doubt that shivers are running down the spines of any bankers based on the response the Tánaiste has given.

Was that the bank guarantee?

I do not think bankers feel the Government is about to impose a levy as a result of the approach they have taken in opposition to Government policy. The Tánaiste has, frankly, bought a large supply of the banks' Kool-Aid. The notion that tracker mortgages are the root of all evil is not the case and it would be worth the Tánaiste's while to look into it. If that was the issue, one could turn to the decision that was taken at the EU Council meeting in June 2012, which the Tánaiste and others hailed as seismic and a phenomenal game changer with the potential to resolve much of the legacy issues. Within that, the overhang from the tracker mortgage issue could have been dealt with. However, we discovered here on Tuesday that the Government never even applied to the ESM for funding under that decision as it now believes the banks are resolving the issue without recourse to the ESM. Does the Tánaiste know how the banks are doing it without recourse to the ESM? It is on the backs of the 300,000 variable interest rate mortgage holders in the State. The balance sheets are being repaired and the Government is preparing to sell its stake in the banks all on the backs of those 300,000 mortgage holders. The Government needs to come clean on that. Will the Tánaiste at least reiterate the Government's previous statement to the effect that it is prepared to impose a levy on the banks if they fail to acquiesce to an appropriate rate reduction commensurate with the cost of funds today rather than in the past? That is what we all want to see.

Well, Timmy, you seem to be a bit of a Clare Bourbon. I do not know how much Deputy Dooley remembers and how much he has forgotten, but he certainly seems to have learned very little. Ireland needs a banking system that functions properly.

Remember when the Tánaiste was going to burn the bondholders.

The Tánaiste is sounding like a banker herself at this stage.

It is Frankfurt's way.

When we came into office, we faced the depredations of Fianna Fáil which its representatives seem, like the Bourbons in France, to have forgotten completely.

The Government has bought the Kool-Aid.

Do not mind the Bourbons; look after the mortgage holders.

Can we have order, please?

Deputy Dooley is the Clare version of it. Deputy Dooley said he wants a properly functioning banking system.

We do not have it.

I am not sure Fianna Fáil is converted to that idea yet, but it is absolutely critical.

What is the Government doing about variable rate mortgages? That is the question.

What we have in this country are banks with two particular portfolios of mortgages; tracker mortgages and variable rate mortgages.

The Government is four-square behind the banks. The Tánaiste is guaranteeing the banks here today.

It is a bankers' charter.

I hope some of the bankers are listening. I know Fianna Fáil invited them in when it was in government.

They will be happy with what the Tánaiste is saying anyway.

They will be delighted with the Tánaiste.

They will be having a party.

The bankers were in there on the evenings the fatal decisions were made that wrecked the banks. That was Fianna Fáil's contribution to what happened. When it comes to the banks, I do not expect them to fetch up being grateful to the Irish people as they seem to have collective amnesia at times.

It is spreading to the Tánaiste.

Fianna Fáil arranged a mortgage called the promissory note of €30 billion for this country, which was to be paid within ten years.

The Tánaiste was going to burn all the bondholders. Does she remember that?

By the way, Fianna Fáil took an interest holiday on the first two years, which were the last two years of its Government, and left us to renegotiate that.

Hear, hear.

The Government is burning the variable mortgage holders.

The only people the Government burned were those who voted for it.

When it comes to renegotiating better deals for our taxpayers in relation to banking, we have done so with the promissory notes. People from Fianna Fáil and other parties told us the changes would not work but they have ended up saving the country an enormous amount of money.

Talk to the variable mortgage holders.

The Government saved us €9 billion.

We are still paying every penny of it.

The Bourbons are behind the Tánaiste.

As we resolve this issue with the banks, the people who are paying those rates will receive reductions. If they do not, there are other mechanisms. One of those is a levy, but there are others as well.

"The Government does not have the power to direct, but it has the power to influence". Does the Tánaiste remember that phrase?

I am resolved to see that if the banks continue to turn a deaf ear to the discussion that is ongoing, expressed by both the Minister for Finance and the Central Bank, those banks will have to face other consequences.