People who can pay their debts are legally and honor-bound to do so. In Greece, that would be those who are hiding behind the Katseli Law intended to protect those who genuinely can’t pay.
It’s also the New Democracy Capitalist Conservatives of Prime Minister Antonis Samaras and his partner, the PASOK Anti-Socialists, who owe banks 250 million euros and aren’t paying.
But they want the people they devastated with big pay cuts, tax hikes, slashed pensions and worker firings to satisfy international lenders to cough it up to the banks.
At the beginning of this year, Samaras allowed the lifting of a moratorium on the foreclosure of homes of people who can’t pay their mortgages. The ban was put in place three years ago when PASOK was in power and its current leader, Evangelos Venizelos, was finance minister.
But Venizelos, who would cut a deal with an enemy or political rival to keep him in power (Samaras made him Deputy Premier/Foreign Minister in return for backing austerity and violating the principles on which PASOK was founded) went along with lifting the moratorium, knowing no politician would lose his home, only the peons and great unwashed with which he doesn’t associate. They smell bad, you know.
Greek banks have been reeling the past four years – including those used as private ATM’s and slush fund dispensers by rich, crooked businessmen and bankers.
They were whacked with big losses when a previous government, with Venizelos as finance chief, hit private investors with a 74 percent write-down on their holdings, including suckers in the Diaspora who trusted in their homeland and lost a bundle and would line up to do it again.
Venizelos intimated that most people who weren’t paying the banks (excluding his party, of course) were deadbeats, discounting the pay and pension cuts of 30 percent and more and the doubling of the property tax he hit them with.
But with bad loans hovering near 40 percent in Greece in the midst of a crushing economic crisis, a review of debtors found that only about 20 percent can afford to pay banks what they owe.
A senior bank official told the newspaper Kathimerini that one in five customers are “strategic defaulters” hiding behind the protection on the Katseli Law.
Many of the legitmate debtors are represented by a group called Ekpoizo, with attorneys who fend off the hounds of private collection agencies banks sic on debtors, excluding New Democracy and PASOK who gave them 50 billion euros. There was no quid pro quo, of course. At least none that could be proved.
In housing credit, estimates by bank officials were that only 15-20 percent of nonperforming loans, or 4 to 5 billion euros out of a total 25 billion, could be serviced.
“About one in every six who have taken out a mortgage loan and claim they are unable to make their payments could service them properly,” a senior official said, Kathimerini reported.
In consumer credit, out of a total 10 billion euros of bad loans, estimates say debtors could in fact service loans worth between 2 and 2.5 billion euros – i.e. some 20 to 25 percent.
Senior credit sector officials said only up to one in three borrowers using the Katseli Law, named after former minsiter Louka Katseli who introduced it four years ago, don’t meet the eligibility criteria. Applicants for protection from creditors number 150,000 for debts adding up to 12 billion euros.
Bank officials add that when the lenders informed borrowers about the consequences of coming under the protection of the Katseli law, some 30 percent said they would withdraw their application and instead try to enter a payment plan.
That was because many of those borrowers had not realized that the provisions of the Katseli law call for the applicant to declare bankruptcy, which would put them under monitoring for the rest of their lives.
Samaras promised to introduce a measure that would help provide relief for heavily-indebted households who can’t afford to pay because of austerity but reneged on it, just as he did when he gave his word he would hold investors from the Diaspora harmless when he took office.
This is what happens when politicians, such as Hillary Rodham Clinton who said her family was “dead broke,” except for her $8 million book advance and $200,000 speaking fees, try to understand debt because they don’t have any.
Samaras and Venizelos have led privileged lives and the next time either of them is in real debt will be the first time because they have resources many people who have real jobs don’t.
By mid-August, the government said it would present a plan to deal with private debt, having reneged on a bill to help heavily-indebted households, and already it’s set to help businesses but not average Greeks who don’t have friends in high places.
The law being planned would force a company’s creditors to accept a debt restructuring plan if only one-third of them go along with it.
Maybe New Democracy and PASOK should apply and, failing that, could also try to come under the Katseli Law, except they are able to pay, unlike the people they’ve hurt.
“We do not want canny debtors to take advantage of honorable people,” a ministry official told Kathimerini. Now who could that be?