Cyprus Mail
Cyprus

Crunch vote on rejected bills

By Elias Hazou

THE situation was very much up in the air on Monday, 24 hours before the House plenum was to vote on whether to again push through two repossessions-related bills which the President refused to sign into law the first time round.

The parties did not show their cards following a joint session of the House finance and interior committees that met one last time to discuss the two bills ahead of Tuesday’s crunch plenary vote.

But reports spoke of horse-trading being in full swing, as MPs tinkered with the bills’ texts in a bid to satisfy all sides. The parties may amend the bills at this stage.

The two legislative proposals concern the right of borrowers to report a commercial bank to the Central Bank governor if they think the lender violates the code on loan restructuring, and the Central Bank’s authority to step in and stop mass foreclosures.

One of the legal arguments raised by President Nicos Anastasiades was that both issues were covered in other laws, and that the bills were incompatible with the terms of the island’s bailout.

Four other bills were deemed unconstitutional and were referred to the Supreme Court for its ruling.

All six items were passed by opposition parties despite warnings they would prompt international lenders to withhold the next tranche of assistance.

Should the House majority stand its ground on the two bills sent back, the President may either yield and finally sign off on them or else refer them, too, to the Supreme Court.

It’s understood that DIKO in particular – on whose stance it all hinges – fully appreciates the consequences of passing laws that are unacceptable to international creditors, or of drawing out the standoff with the government. But this realisation must be offset by face-saving considerations.

“The basic premise of the majority of the parties remains, namely, that parallel to the foreclosures law there must be a safety net shielding borrowers, households and Cypriot businesses,” chairman of the House finance committee Nicholas Papadopoulos told journalists later.

His party DIKO, he added, would seek to produce bills “that are acceptable to our European partners but also safeguard the people of Cyprus.”

For his part, DISY deputy Prodromos Prodromou hinted that certain amendments to the two items were possible to achieve parliamentary consensus.

According to the President, any law in the pipeline giving a national Central Bank powers over commercial lenders must first be cleared with the European Central Bank.

A joint report from the House finance and interior committees, released on Monday, noted that parliament is not opposed to seeking the opinion of the ECB if this is indeed required of Cyprus under international treaty.

Existing laws already give borrowers the right to report lenders to authorities if they believe a bank has broken the code on loan restructuring.

But the bill drafted by the opposition parties would additionally have the Central Bank slap fines onto lenders found in violation.

Moreover, according to the same bill, for as long as the Central Bank governor is investigating such a complaint against a bank, any foreclosures proceedings against the borrower filing the complaint are suspended.

The governor must investigate complaints with 45 days. If a lender is found to have violated the loan restructuring code, then any and all foreclosures procedures on a primary residence are frozen until a bank returns to compliance.

In addition, borrowers may report alleged violations that took place before the date of entry into force of the law.

As far as the other bill is concerned, the Central Bank may, “if it deems that the stability of the monetary-financial system is adversely affected,” step in and order banks to modify the pace of foreclosures.

Also on Monday an inter-parliamentary committee of ‘experts’ held its first meeting with the finance minister to discuss the way forward on an omnibus bill governing bankruptcies. All parties save AKEL are on the committee, which will work together with government technocrats in hammering out insolvency legislation by the end of the year.

 



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