After the economic crash there was a lot of sympathy for people who had taken on more than they could handle. Banks had just been bailed out and under state ownership they were instructed to go easy on debtors, allowing them time to get on their feet.
It was not a mistake, but it led to a situation where many people took advantage of that amnesty and stopped paying their mortgages altogether. This obviously did not suit the banks. Things got worse when their attempts to evict some families drew widespread criticism and led to the formation of the New Land League. This gave banks an idea of how hard it was going to be to repossess properties by themselves, so they decided to let someone else do that job for them.
IBRC loans were the first to go, while last year's decisions by Ulster Bank and NAMA to offload loan books to vulture funds have been a disaster for many people, including farmers, struggling to re-pay long-term loan debts. Reports suggesting that other banks are also planning to follow suit are worrying. It seems a tad ungrateful after the amount of money Irish taxpayers coughed up to save the banks.
Companies like Pepper, Lone Star Capital, Blackstone, Oaktree Capital, Starwood Capital, King Street Capital and Cerberus, who bought Ulster Bank's distressed loans in October, have no ethical guidelines or even such pretence. They don't try to work things out with the debtor. Unless the conditions of repayment are met in full, they tend to move for eviction.
For example, a famous old pub, Jack Nealon's in Dublin, was closed last week because a vulture fund had bought the loanbook portfolio it was part of. Despite being a viable business, orders came to return the keys, the building was going back to market. In another case a vulture fund, owned by Goldman Sachs, is currently pursuing a summary judgement in the High Court against individual members of the Kelleher family, who own the Blarney Woollen Mills group. If granted it would make those named personally liable for €1.7m of company debts, a classic vulture fund tactic.
These companies know how to use the law to their advantage. Indeed, without any need to garner a good reputation, they have no scruples about hitting you below the belt. They even seem at times to operate beyond the reach of the law. An analysis from UCD's School of Social Policy last month found that 24 subsidiaries of vulture capital companies paid less than €20,000 between them in taxes for 2015 and 2016 combined. This is despite the fact that they control €20bn worth of distressed assets here.
Now that these companies are buying up loan books, there will be no telling how many farmers will be affected. If a term loan slips over the line will they call in the entire debt-load of the farmer? Indications are that they will try. The pressure is on to prevent a major re-structuring of land ownership in Ireland. This corporatisation of farming already happened in the USA, New Zealand and Australia. It has detrimental effects on a host of things from food quality and environmental standards to country life. And that's not all. If the corporate big-wigs have decided to build up Irish land portfolios it is bad news for us all.
Their interest in land is going to be based on what they can get out of it. Don't be surprised to see their presence accompanied by renewed attempts to allow fracking, and watch out for mining companies sizing up our mineral wealth. Generous grant aid for commercial forestry and renewable energy projects have disrupted the lives of many people by attracting big-money investors. The presence of billionaire players will push the odds further in the developers' favour.
Already there is a sense that our planning laws lack fair play. Communities don't feel like they benefit from large infrastructural projects like wind farms, while massive forestry schemes are having detrimental social and environmental impacts. New inter-connector lines have to be built to service all the scattered energy projects that are being allowed by our unfocused planning laws and complete lack of wind regulation. Now these overly generous incentives are attracting the vulture funds.
Minister for Finance Michael Noonan told the Dáil in December that the Central Bank does not keep stats on the Irish holdings of vulture funds. It is time it did. In addition, we need caps on grant aid for wind and forestry so that it is not all oversized imposition. We also need new laws to prevent these vulture funds from avoiding taxes and we need to strengthen the hand of mortgage holders who are trying to keep afloat. In general we want Ireland to be a less attractive place for this kind of business.
It is heartening to see the IFA and ICMSA both condemn these funds and call for measures to inhibit their ability to take over family farms. This will be a long fight. A lot of the farmers caught up in the latest sell-off have the ability to pay back their loans, but the question is, will they be given a chance to do so?