Our View: Why is no one ever to blame for state’s incompetence?

A staggering 43.69 per cent of the loan portfolio of the state-owned Housing Finance Corporation is non-performing, but not a single foreclosure has been carried out. Deputies who heard this at the House finance committee on Monday claimed they were surprised, but were they really?

If the organisation had dared to foreclose the home of one of its debtors, deputies would have been shouting and screaming, accusing the heartless government of allowing a state entity to make people homeless. No government would ever have allowed this to happen, aware that it would have been crucified by the parties, even though it would have been the correct line of action.

Thanks to the populist parties and pressure groups, debt defaulters are presented as victims that must be protected by law from the evil banks. And a state-owned organisation offering housing loans cannot behave like a bank, something its customers are well aware of. This is why NPEs are close to half its loan portfolio, valued at €274 million.

Deputies had heard that one customer took a €500,000 loan for a luxury house with a swimming pool and never made a single repayment. Another had not made a loan repayment for 20 years. General manager of the organisation Christoforos Kaplanis said that all NPEs were more than 90 days late. He also said that for the organisation to carry out foreclosures it would have to hire more staff, which did not seem a very convincing explanation. Surely a law firm could have been contracted to carry out this work.

The reality is that as a state entity the Housing Finance Corporation was under no pressure to collect the money it was owed. There are no shareholders to put pressure on management to tackle the problem and politicians would not dare do such a thing, because of the political cost. It is after all, the taxpayer’s money, about which politicians do not care, that will be lost. Borrowers knew this, which is why they chose not to make a repayment.

This scandalous situation cannot go on. A credit organisation that is unable to recover €274m of its capital, even if it is state-owned, is heading for bankruptcy. This is why the finance committee was on Monday discussing a bill that would allow the organisation to sell its portfolio to credit-purchasing companies. It will have to offer a very big discount, well above 50 per cent, for any such firm to buy the NPE portfolio, but the government hopes to salvage something.

The reality is that well over €100m will be lost in yet another depressing example of the state’s entrepreneurial incompetence, for which nobody is ever responsible. When the state wastes hundreds of millions of the taxpayer’s money nobody is ever to blame.