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Greek FinMin: “If home foreclosures won’t be allow, banks will collapse”

That’s certainly the most provocative statement and the worst joke of this August: Greek Finance Minister Yiannis Stournaras warned that if home foreclosures won’t start banks would collapse. speaking to Sunday newspaper Realnews, Stournaras added that special provisions will be met with social and economic criteria to protect the poor.

Troika is putting pressure to Greece to lift the ban on home foreclosures imposed in 2008. End of 2012 the ban was supposed to be lifted but Athens managed to get extension for another year.

 Greece will lift restrictions on home foreclosures to allow banks to recover bad loans, the finance minister said on Saturday, adding fuel to a row that may test the cohesion of its fragile coalition government.

Cash-strapped banks are currently barred from auctioning most first homes owned by delinquent borrowers, under a temporary measure introduced in 2010 to protect austerity-hit households.

The freeze on forced auctions, which has already been extended three times and is set to expire on December 31, should not be extended any further, technocrat finance minister Yannis Stournaras said.

“If auctions aren’t liberalised, then banks will collapse,” he was quoted as saying by weekly newspaper Realnews.

The European Union and the International Monetary Fund, which have spent about 38 billion euros ($50.67 billion) between them to rescue Greek banks, are pressuring Athens to take measures to clean up lenders’ balance sheets.

But several lawmakers from the country’s two-party ruling coalition oppose foreclosures, fearing a backlash from home-owners amid record joblessness and plunging wages.

“People will take their shotguns… a collapsing property market is better than a civil war,” said lawmaker Sophia Voultepsi, from the conservative New Democracy party of Prime Minister Antonis Samaras, earlier this month. (full story in English Reuters)

so far several lawmakers of the two-party coalition government, that has a thin parliamentary majority – have publicly opposed the lifting of foreclosures ban. Question is whether they’ll keep this position when it comes to voting in the Parliament or when the lift will occur through a ministerial degree. Will they resign and force early elections or will they plead to ‘save the country’ – as usual? –


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One comment

  1. In some respects Stournaras is right: there has been a totally crazy situations since 2008 that has to be rectified. The fact that first houses could be foreclosed upon created a strange sense of security that did not made people more cautious but at first showed them even more that they could borrow and borrow and borrow with impunity.
    The fact that the banks were kept alive did that same thing again.
    That’s not a situation that could remain this way.
    But changing the foreclosure rule now would indeed be very… eh… ‘brave’? Was there are probably no buyers for most of the properties. And no, hedge funds are simply in no way interested in some blocks of flats in downtown Athens. Especially when they do not have Acropolis or sea view… Yes, the dreaded “foreign parties” might be interested in prime real estate. Like that small building under the Acropolis that is owned by our friend Akis. And most buildings along the shore, that could be interesting to develop big scale tourism facilities are almost never first homes and can be foreclosed on already.
    So, this measure would only show that the banks are, although they got billions of euros in recapitalizations, in fact totally broke and should go belly-up as nobody will buy their seized property…
    Therefore: Although the FinMin is right and it would at last clear up one of the biggest messes in Greece, he won’t be able to proof it. Because nobody will risk a civil war on this… eh… they won’t, won’t they??? 😕