THE defence of vulture funds by the Taoiseach shows how “out of touch” he is with those struggling to pay mortgages, says Fianna Fail TD Michael McGrath.

The party’s finance spokesman has welcomed the signing into law by President Michael D Higgins of his Private Members’ Bill to regulate so called ‘vulture funds’.

And he described as “bizarre” comments by Varadkar that it was wrong to use the term even though they had snapped up thousands of home, farm and business loans since the recession.

In an interview with political reporters, the Taoiseach was asked about the practices of these financial institutions, who many see as being too tough on non-performing loans. Varadkar responded: “I’m always reluctant to use the term vulture funds because it is a political term.

"What we’re talking about here is investment banks, investment funds, finance houses, you know, there are lot of different financial entities there and the term is used, vulture funds.

“But you’ll know from the numbers that they’re often better at write-downs of loans than our own banks are.” Under the new laws, customers will no longer have to deal with middle men because the funds will have to interact directly with the customers.

They will be, for the first time, regulated by the Central Bank who will be able to apply sanctions to any that are not meeting required standards.

Responding to Varadkar, Deputy McGrath said: “The comments in the media today from the Taoiseach about how vulture funds are better than banks at dealing with debt problems are really quite bizarre and underline how out of touch he is with the reality facing tens of thousands of families across the country.

“Many of the deals referred to by the Taoiseach entered into by these vulture funds involve the loss of the home, the farm or the business.

“It is the objective of most people struggling with debt to hold on to their home or their business.

“Entering into long-term restructure arrangements — or what the Taoiseach describes as ‘extend and pretend’ arrangements — with their bank give them a chance to get back on their feet while staying in their home.

“Today’s comments from the Taoiseach show that Fine Gael still believes these funds are the solution for many distressed borrowers.”

The FF man added: “The coming into effect of this legislation is a good day for mortgage holders, business owners and farmers.

“Until now, these funds have been untouchable, but the Central Bank will for the first time be able to have direct contact with these funds and apply strict regulation directly to them.”