Home > Banking & Finance, Business, Ethics, National Politics, Uncategorized > Osborne’s threats to break up Banks: True banking reform will take leadership by example rather than the issue of diktats to the financial leviathans for whom God is profit first and the interests of the very customers who keep them there come a distant second

Osborne’s threats to break up Banks: True banking reform will take leadership by example rather than the issue of diktats to the financial leviathans for whom God is profit first and the interests of the very customers who keep them there come a distant second

Commercial Altruism is perhaps an aspiration, but a term which certainly describes the kind of ethics that we need to see exhibited more often within industry and certainly within the Financial Sectors where its absence has been so painfully apparent.

Any resistance to George Osborne’s plans to require Banks to split their retail and less-stable investment arms in attempt to avoid further Taxpayer-funded bail-outs will hardly come as a surprise,  and particularly so when politicians themselves hardly exhibit anything near that type of mentality. But is this really all that the Government actually has within its power to do?

Few could actually believe the sums thrown at the rescue packages of the Banks which had effectively beached themselves through little more than acts of greed and complete disregard for anything other than maximising profit on the part of a few – all at the cost of people who have paid perhaps not just once through fees; but twice by then paying out on the losses when speculation – upon what is effectively thin air – crashed to the floor, as anything without true foundation surely would. The true wonder is how they kept the charade going for so long.

Forcing banks to ‘ringfence’ funds and therefore prevent further Government intervention through the creation of dedicated retail arms, is hardly likely to encourage a growth in benefit to domestic or small business customers. It is in fact more likely to increase the cost of basic banking services to people who already struggle to make ends meet and to those small businesses that need to be subsidised themselves, rather than to be given no option but to subsidise focussed services that banks are currently reluctant to give.

The development and provision of a an easy-to-access or ‘peoples’ bank which would provide the basic account services that everyone is entitled to access is the responsibility of Government, and should be set up as such.

Providing basic free-banking services in this way would provide Government with many advantages such as access to unfettered borrowing streams without 3rd party profit margins being included. But it could also support the administration of ‘smart’ card payments to retailers by customers, restricting the purchase of certain items by those being encouraged into work, with the added benefit of instantly losing the stigma which would be associated with payments made with a non-bank-derived payment card.

Better still, a Government-based bank run as a public service and with a customer focused culture, rather than one based upon benefits to employees and stakeholders may be able to provide many of the products which those on low incomes currently seek such as ‘payday loans’ without the utterly unrealistic levels of interest, and also provide the low-cost services and low-margin lending which new and existing small businesses need in order to survive and then thrive as we have so very long been seeking.

Creation of such a new bank – or indeed adaption of one of those that the Taxpayer already owns – would require a radical change in thinking and the type of leadership which has been sadly lacking in British politics for far too long. But it could be done.

The real question here is whether the Chancellor and the Government really want to affect change in the way that the Financial Sectors operate.

True banking reform will take a lot more effort than simply telling the banks to split their operations or even go back to employing managers within every branch.

Reform will take leadership by example and the provision of the best services possible for those who have the least money first; not by sound-biting newsworthy diktats to the financial leviathans for whom God is profit first and the interests of the very customers who keep them there come a distant second.

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