How Do Banks Lose Money When They Profit Every Time Money Changes Hands?
It is very hard to understand how the banks could have got themselves in such a dreadful position that without goverment support they would have struggled to survive and possibly collapsed. They have their hand in everything we do and take a commission almost everywhere that money changes hands. It is a recipe for getting very rich and a business model that many would envy.
Imagine if you can, every single transaction made right across the country involves a little commission for the banks. When you pay by credit card, when you pay by debit card. When you get paid and the money goes into your account, there is a fee, when the shop you buy from pays money into the bank there is a fee.
It would be very hard to live without a bank account these days. Even the government pushes people to have bank accounts to pay benefit and other money in. The banks have made themselves an essential service in modern society.
The very fact that the government has pretty much agreed that the main banks cannot be allowed to fail shows also that they cannot be allowed to act against the interests of consumers and the country. The banks have unprecedented power but they also have a huge responsibility to behave properly.
Banks should be boring, they should be dull and uninteresting. Bonuses are no more justified in banking than they are for a bus driver or shop worker. There is a very good case to be made that bonuses are what destroyed the banks and almost certainly the ‘sell products and get bonuses’ culture banks have chosen in recent years has alienated retail customers and changed the nature of modern banking.
The banks have to change. We do not want to revisit this credt crisis in a few years time. The banks must be forced to becoming boring and dull and dependable once again.
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- Do The Banks Deserve Our Support?
- Time Is More Valuable Than Money
- What Matters Most Time Or Money?
Filed under: Banking
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Hmm, with respect, be careful what you wish for. I agree they need to reign in their successes, but in the 1970s you could only get a mortgage on bended knee, and all kinds of debts were hugely more expensive.
If the banks can’t make their profits one way they’ll make them another. That’s not at all to disagree with your main point – I agree – but I think there’s a middle ground.