The government has run into serious reservations on the part of its creditors and the banks concerning the replacement of the protection system for debtors’ primary residences, with the clock ticking down to the deadline for the submission of the necessary bill, as the current system expires on Thursday.
Estimates yesterday spoke of the government attempting to reach a compromise with its creditors, as it is desperate to prevent a crisis, which would be disastrous in the runup to the general elections later this year. The bill is expected to be ready by tomorrow, when the creditors’ report on the second post-program assessment of Greece is due too.
Sources said that the creditors sent a letter to the government late last week, signed by leading European Commission representative Declan Costello, objecting primarily to the provision for one system protecting the main residence and another for the rest of the Katseli law regulations.
For their part, the banks are stressing that their consent for the high protection limits the government has proposed and the inclusion of corporate loans secured against a primary residence in the new system was conditional on the absence of any loopholes in the new framework to replace the Katseli law.
Sources say that the most important issue in the long list of observations the banks have sent to the government are the following:
1) Banks want anyone who applies via the online platform and is rejected for failing the criteria to not be able to resort to the courts, as this is seen as a breeding ground for new strategic defaulters.
2) The overhaul of the entire Katseli law in the next three months is necessary, the banks say, as there should not be two parallel systems for the bankruptcy of individuals because this would also be abused by strategic defaulters. Among the views on the table is even the proposal that the bill on the protection of main residences be frozen for now and the debate for the complete overhaul of the law be launched.
3) The lenders also insist on the clear determination of the method and the level of the state subsidization of tranches due from debtors in genuine distress; this is an issue that has been postponed for the future and the issue of a joint ministerial decision.