Here’s a Halloween horror story: A 97-year-old woman who owes the bank €455,000

In 2003, Ireland was just on the cusp of its expansive kitchen island era. Harvey Nichols was scouting around for a location for its first Dublin store. This was the peak moment for taxi drivers to tell you about their “little places” in Bulgaria or Puglia. Plans were floated that year for a U2 Tower on Sir John Rogerson’s Quay. One submission envisioned a giant Tetris block-like structure floating over the Liffey with a roof garden stretching 78 metres above the city – “the trees within are visible, rising up to the clouds”, as the architects put it. As a society, we had a bad case of the PT Barnums. No dream was too big or too preposterous.

And no less fantastical a set of edifices than those floating monuments and recording studios in the clouds were the towering loan books of Irish banks. Irish Nationwide’s soared to €4.248 billion in 2003; Anglo’s was a whopping €18.1 billion, up 34 per cent in one year. “Asset quality remains robust,” chief executive Seán FitzPatrick confidently stated with a smirk at Anglo’s AGM.

Taoiseach Bertie Ahern quipped in 2003 that he had not recently encountered “a bank or financial institution that was poor”. Irish people didn’t feel particularly strapped either: credit card debt had risen nearly three quarters of a billion euro in just three years. All that would soon change, but warning bells are hard to hear over the brash braying of politicians and men in striped shirts at banking AGMs. The banks’ biggest worry at that point seemed to be not that property prices might fall, but that they might run out of people to whom they could lend money. So they started casting about for a fresh supply of willing borrowers.

And 2003 was also the year a single woman aged 72 got a letter from her bank, Bank of Ireland, offering her a “lifetime loan”. These products, which had been launched to great fanfare just two years earlier, promised large sums of money offset against the value of your house which would literally only be repaid over your dead body, or after you permanently left the home. “A lifeline for cash-strapped elderly people,” one commentator wrote approvingly in another newspaper. “The borrower gets up to a third of the money in cash and the bank could get over half of the original value in interest. Of course, the property value should rise in the meantime.”

That “should”, as we now know, was doing an awful lot of heavy lifting. The woman in question only needed €30,000, but for unknown reasons she took out a loan of €130,000 anyway – back then, borrowing more than four times what you needed may have seemed practically prudent.

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Here’s a Halloween horror story whose ending you already know: property prices collapsed but the interest went on accumulating. That woman is now 97 and the lifetime loan of €130,000 has become a life-sapping debt of €455,000. Someone representing her family wrote to Dominic Coyle in The Irish Times this week to describe how they have been trying to get mediation on this loan with Bank of Ireland since 2022 and have complained to the Financial Services and Pensions Ombudsman.

There was a second reminder this week of the lingering hangover we’re still suffering from the “we all partied” days. On Thursday, it was reported that the Government is considering financing early repayment of €8 billion in post-crash loans, a move that could “generate savings of €90 million to the exchequer”. There were few mentions of the fact that the net cost of the bank bailout was €42 billion, more than €39 billion of which disappeared into the black holes that were Anglo and Irish Nationwide. But not to worry, we stand to claw back €90 million by virtue of being the best little country in the world to go bust and bounce back again.

You might assume we’d have learned something from all this about the risks of putting all your eggs in one basket. That we’d now be wary of theories about “endless growth” and suspicious of “soft landings”. That we’d remember how quickly easy money can turn expensive. You’d certainly assume that if we had appointed a body specifically to ensure we didn’t forget any of these lessons, we’d hang on their every word.

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And yet, for years now, the watchdog whose job it is to do just that, the Irish Fiscal Advisory Council (Ifac), has been shouting into the void that we are once again in danger of losing the run of ourselves. In August, Minister for Finance Simon Harris simply shrugged its pre-budget warnings off with a “we don’t ignore their advice, but they’re not the Government”.

Within hours of Budget 2027, Ifac issued its damning verdict: the budget put “the public finances on a worse trajectory by repeatedly breaking established spending limits and increasingly relying on high-risk corporation tax”.

[ Every year, as I get ready to file a tax return, I experience a strange sort of reckoningOpens in new window ]

To be clear, no one is warning of another banking crash. But in a tumultuous world – one riven by war, grappling with the cost of the climate crisis, jumpy about the risks of AI, subject to the unpredictable whims of strongman leaders and restless voting populations – the smart thing to do would be to plan for the unexpected. Especially in a country where nearly half our corporation tax revenue comes from just three companies.

In 2003 the fantasy was that house prices would go on rising forever; now it’s that the magic tax tree will keep bearing fruit eternally. The Government is so confident of this it’s planning to spend €6 out of every €7 in corporation tax revenues it takes in.

As a country, we are suffering from a kind of long-hubris – it’s like long-Covid, except it involves a brief period of collective madness that settles into a form of pathological denial. Now 18 years on from the crash, the symptoms remain debilitating. By far the worst of them is amnesia.