Banks caught amid EWC disaster

[Vox Populi Vox Dei]

We can sum up the impact of the proposed Draft Constitutional Eighteenth Amendment Bill of 2019 that will legalise EWC in three questions:

• Will anybody keep paying their mortgage bonds if government takes their property without any payment?
• How can banks enforce payment of a bond if the underlying property is taken?
• How will it affect people?

Banks are caught in the middle of this disaster and they have no way out.

The Institute of Race Relation says in an analysis of the draft legislation that the reference to “property” would also include improvements such as houses, office blocks, shopping centres, factories, hotels, schools and hospitals. “EWC will allow government to take away your property and leave SA poorer and hungrier,” says the IRR.


Government is pushing for more power to decide the extent of EWC. Previously, a clause in the draft bill would have let let courts decide in which instances EWC would be enacted. The court had to decide in what instances property and any improve thereon could be expropriated without payment.


The IRR says the bill now makes provision for six instances in which no compensation is necessary, as well as a new proposal that new instances can be added by way of new statutes to the bill. Any new statute would only require a simple majority in Parliament to be enacted.


“The ANC has now further undermined the public participation process by declaring that the draft bill must be amended to give the power to decide on compensation to the executive, rather than the courts,” according to the IRR analysis.


The banks are fully aware of the situation, and scared.

None of the commercial banks were willing to answer Moneyweb’s straight question of what they will do if government takes away properties and owners refuse to pay the outstanding bonds. They were not even willing to discuss the simpler question of the current procedure when dealing with mortgage bond arrears.


Absa ignored Moneyweb’s specific questions and responded by way of its media relations department with a short statement: “The parliamentary process to amend Section 25 of the Constitution is an on-going process. We cannot comment at this stage on the matter. We will focus our attention on making our contribution to parliament when the opportunity arises”.


Other banks did not answer the questions, referring Moneyweb to the Banking Association of South Africa (Basa). Bongane Sibanyoni, head of regulatory advocacy and policy at Nedbank, says that it’s currently participating in a process to comment through Basa and other business forums on the draft amendments to the Constitution.


“Until there’s further clarity on this process, it is business as usual at Nedbank. We continue to assess and grant new mortgage loans as per our usual rules and processes. Bond repayments, which are the subject of a contractual agreement, remain due and payable,” says Sibanyoni.


Basa promised answers as soon as its executives all had an input. Ironically, Basa’s executive committee comprises individual bank executives. A few days passed and no response was received.

Banks caught amid EWC disaster

Who will keep paying mortgage bonds if or when government takes property?

www.moneyweb.co.za

 

[Tman*]

None of the commercial banks were willing to answer Moneyweb’s straight question of what they will do if government takes away properties and owners refuse to pay the outstanding bonds

Umm, its not like paying for a cool drink mate;

A bond payment is probably the biggest debit order to go off on any home owners bank account each month. Here is a senario for you:

A: keep paying bond while an ANC comrade is living in your home, and you live on the streets

B: stop paying bond, use funds for alternate accommodation

its not about "refusal" or "willingness", its about survival.

 

[Sinbad]

Banks should start shutting down all anc related accounts. Starve the kunts into submission.

 

[ShaunSA]

Time for the banks to stop faffing around and pick a side

 

[newby_investor]

The thing is though, that if the bank doesn't operate within the bounds of the law, the government can take away its banking licence pretty quickly, and there goes an entire business.

Government would just need to make an example of one bank, and the rest would fall in line pretty quickly.

 

[FaSMaN]

I wonder how this is going to turn out, they seems to have their blinkers on and just wants to plow forward with EWC. At the end of the day some one needs to pay, and how can anyone in their right mind force some one to pay for something that the government took away from them.

Honestly I am so tired of hearing how they want my house and my stuff I want to give it to them if they can offer me a ticket out of this place (as in residency in another country) but hey thats never gonna happen XD

 

[MrGray]

The thing is though, that if the bank doesn't operate within the bounds of the law, the government can take away its banking licence pretty quickly, and there goes an entire business.

Government would just need to make an example of one bank, and the rest would fall in line pretty quickly.

Not if they acted in unison. But this is unlikely.

 

[Mista_Mobsta]

The thing is though, that if the bank doesn't operate within the bounds of the law, the government can take away its banking licence pretty quickly, and there goes an entire business.

Government would just need to make an example of one bank, and the rest would fall in line pretty quickly.

And now we know why the ANC wants to control the SARB so badly eh? The Prudential Authority, solely working under the SARB, has full authority to recommend legislation and issue/pull banking licences etc. Funny that hey...

 

[CAPS LOCK]

I wonder how this is going to turn out, they seems to have their blinkers on and just wants to plow forward with EWC. At the end of the day some one needs to pay, and how can anyone in their right mind force some one to pay for something that the government took away from them.

Honestly I am so tired of hearing how they want my house and my stuff I want to give it to them if they can offer me a ticket out of this place (as in residency in another country) but hey thats never gonna happen XD

The ANC are very much between a rock and hard place.

The can't renege on their promise without political setback, and they know very well the economic consequences should they proceed with their promise.

Essentially, it's going to be a choice of selfish evil. To ensure they continue to subsist as a political majority, means choosing a path of economic destruction.

 

[lumeer]

Do you think that they'll go as far as to expropriate people's homes?

 

[3WA]

What happened in Zimbabwe? Was any bonded land expropriated? How did the Zimbabwean banks respond?

 

[FaSMaN]

Do you think that they'll go as far as to expropriate people's homes?

People dont stay on their farms?

That aside, I doubt it (comment was said more tongue in cheek)

 

[Vrotappel]

The financial institutions in SA is much stronger than the ANC, It is time they use that power. Place all transfers to SARS in a holding account until the ANC come to their senses.

 

[BBSA]

Do you think that they'll go as far as to expropriate people's homes?

If the constitution allows it.....

Maybe not under Ramaphosa but who knows what will happen after Ramaphosa.

 

[thestaggy]

It's obvious what will happen; the forcibly-removed owner will still be on the line for the debt.

There is simply no way the banks write the debt off and government ain't paying either.

And then at the end of the day the banks will still be hit hard when the forcibly-removed owners start defaulting.

EWC will cripple the banks and sink the economy. But you can't tell the ANC, EFF and their horde of zombie supporters that.

 

[Temujin]

Banks will keep trying to claim the money
People will give them the finger
Banks go broke and close doors

 

[BBSA]

The ANC are very much between a rock and hard place.

The can't renege on their promise without political setback, and they know very well the economic consequences should they proceed with their promise.

Essentially, it's going to be a choice of selfish evil. To ensure they continue to subsist as a political majority, means choosing a path of economic destruction.

You assuming the ANC comrades care. Most of them are hoping for a free farm, and could care less about the rest.

 

[newby_investor]

And now we know why the ANC wants to control the SARB so badly eh? The Prudential Authority, solely working under the SARB, has full authority to recommend legislation and issue/pull banking licences etc. Funny that hey...

Good point. I misunderstood this actually, I thought it was from government directly that banking licences originate (or CIPC or something like that). If it's actually SARB then it's quite important to preserve the independence of the reserve bank...

 

[FaSMaN]

Banks will keep trying to claim the money
People will give them the finger
Banks go broke and close doors

Or they will simply ask for more security before offering loans, to cover themselves .... no way will bank allow themselves to make a loss.

 

[newby_investor]

Do you think that they'll go as far as to expropriate people's homes?

The keyword here is without compensation.

Homes have already been expropriated - I know a guy who used to live where the Centurion Gautrain station now is. He was paid roughly a market-related value for his house though.

The constitution as it currently stands does permit zero compensation if it's in the public interest, and the proposed bill basically explicitly hands this power to the judiciary to determine whether or not it is the public interest. My personal feeling is that if it would leave the home-owner homeless and without means to pay his debts, then the court wouldn't permit zero compensation.

Perhaps I'm naive, but I do think at least a little bit of sanity will prevail.