to think most people benefit from banks?

[chandellina]

and to be so fed up with banker bashing.

Will Hutton on Dispatches (Channel 4) has revealed the shocking fact that banks have been making 75% of their lending in the form of mortgages, which his researcher goes on to say is a socially useless function for the economy.

How is it socially useless to allow people to borrow to buy their own homes, and doesn't it inherently make most people net beneficiaries of the financial system?

And where would this country and its inhabitants be without its housing wealth?

All this nonsense about banks holding the country to ransom completely sidesteps the enormous benefits of credit in modern society.

Yes, they should. No, most aren't.

Banks are businesses. They are there to make money. They charge you for everything. £30 for a letter?! They want you to live beyond your means so that they can make more money from you. A bank allowed us to follow misguided information, self certificate beyond our means and get a mortgage, another bank gave us a credit card. Another bank gave us a small overdraft which they then made larger and larger because we live beyond our means and need to borrow more. They take interest, and charges, raising the amount that we owethat they then get interest on. If banks refused to allow you to spend money you don't have, where would they get their profits from. We have now stopped the cycle of borrowing, have downsized, and only have a mortgage now, but the banks are constantly offering to lend us money. They don't really help people, they help themselves!

i don't dispute that they are businesses whose aim is to make money. just like Tesco or BP or any other company. And, as with those companies, you have a choice who you do business with.

saggyold, it really isn't in a bank's interest to let you live beyond your means, if it means you will default on your loan. If you self certified beyond your means that is your fault - you have to know how much money you are committing to repay, it's not the lender's ultimate responsibility to make sure you can repay the loan (though in their interest to do so).

likewise, if someone gives you a credit card, that is not an invitation to run it up beyond what you can reasonably afford to pay back.

watch this

What is called 'narrow banking' is a socially useful function, recycling money taken in as savings (deposits) to borrowers (loans). Like the old fashioned building societies did in the 1950s.

However, that is not what we have. What we have is 'fractional reserve banking' which broadly speaking relies heavily on making more and more highly leveraged loans with a tiny 3% sliver of equity and 97% debt standing behind each loan. A tiny fall in house prices and subsequent defaults will wipe out bank capital (equity) and cripple the banking system again.

There is far to much emphasis on people buying their own home with too much debt. Far too much wealth tied up in housing and not enough being put to productive investment.

'saggyold, it really isn't in a bank's interest to let you live beyond your means, if it means you will default on your loan.'
no, because if we default, the bank don't get to keep my house, the equity, the money I have managed to pay against the loan and the interest paid, do they!
We were stupid, we were young, we were badly advised, and the bank sat back and let us. They did no check whatsoever about what we could pay.
We now know better, and have a more manageable mortgage and few other borrowings.
If they give someone a credit card and they don't run it up, there is no interest. What lender gives you the facility to borrow with interest, but doesn't want or expect you to spend it and therefore pay them said interest!

Nobody 'ought' to be in debt, but nowadays it's very hard not to be with opprtunities handed to you on a plate.

I'm sorry but no bank forces you to tak
e loans, overdrafts or credit cards. If they offer it to you can simply say no. Its not hard.
Everyone is quick to blame the bankers but maybe people should take a portion of the blame. If there wasn't so much demand for credit, banks wouldn't have to find the supply.

If you can't afford something then you cannot afford debt for it

No one forces you to take out any form of debt, but you are strongly encouraged to. If a financial 'institution' you are supposed to be able to trust, suggests you take a loan, overdraft, credit card, then surely it must ok, right?
Back when we were young and naive, we started with a £200 overdraft. Every time we got near the limit, the bank upped the amount we could have. This went on until the OD was £4500. Only then did the bank offer to arrange an interview with their financial adviser, to help organise our finances to ensure we could pay the interest! It's obvious that if we were using the facility In the first place, that we were living outside our means. A company with our interests in mind, would have helped advise us as to how we could avoid using the overdraft in the first place, and not allowed us to increase the initial debt.
We were incredibly stupid in the past, and have learned the hard way that we must only spend what we can afford, and no finanial institution had helped us learn this lesson. If everyone lived within their means, how would banks make a profit?!

By the way, the bank NEVER once asked us if we wanted them to increase the limit, we just got a letter telling us we could have more money.

we benefit from being able to keep our money somewhere safe (oops banking crash) and borrow money at reasonable rates when we need it. but w can use credit unions and building societies for that. we don't benefit from having to bail out banks that have been allowed to get too big to be left to market forces (ie go bankrupt).

"we benefit from being able to keep our money somewhere safe (oops banking crash) and borrow money at reasonable rates when we need it. but w can use credit unions and building societies for that."

When was the last time you saw a credit union atm? Banks provide many valuable services we don't even have to think about on a day-to-day basis, and the fees that we all hate go some way to pay for these. Processing cheques, setting up/cancelling direct debits and standing orders, investigating money laundering and providing advice are just some of the things that require a person at a desk, who needs to be paid. I've been charged a few times in the past, but it was my own fault. Can't really complain when this was in the contract I signed when I opened the a/c. Maybe I'm lucky in that my bank is pretty flexible in terms of temporary overdrafts, etc.

There are some dodgier aspects to the selling of loans and credit cards. I for one think that if a customer needs a loan they'll enquire themselves after thinking about it. It's not a sensible person that hears "5,000? I'll have that, just because I'm entitled to it!" when offered at the counter. Same goes for staff incentives to 'sell' cards etc. I just don't think it's right to be selling a financial commitment like that as if it's a product on Dragons' Den. Saying that, not every bank places such an emphasis on making profits this way, especially after recent years!

If I had any money, I'd keep it under the matress! I might not make any interest, but then neither would the bank. If we all paid for everything in cash, and saved for what we wanted before we bought it, Banks wouldn't need to pay people to process cheques, set up and cancel direct debits or offer advice!

aviatrix, no i don't work for a bank. and i have plenty of bad things to say about the modern financial system.

i just find the bank bashing to be a a bit absurb, since the vast population relies on and benefits from their existence. certainly there is room for improvement though ...

Maybe people will understand what interest really means when at a national level we'll be paying more to service debt than the schools budget!

Banks are a business and there to make money - the rates are clearly set out and the terms. Ok they may not spend huge amounts of time going through al the deatils but surely when you get a bank statement / card statement you can see how much intrest its costing you going over drawn?

Seems that we are not good at educating people at home / school to know about financial products and what they mean.

We need banks but just be aware that they are not our friends and don't perform a social service.

Could not buy a house without some lender bank or BS loaning over a long period so we need them as thats how are socity is.

"If we all paid for everything in cash, and saved for what we wanted before we bought it, Banks wouldn't need to pay people to process cheques, set up and cancel direct debits or offer advice!" Banks would still need people to process payments (like salaries).

There's a difference though, between the retail banks, the ones that give us mortgages, loand, credit cards and current accounts, and the merchant banks which buy and sell financial products which even they don't really understand, who gamble on futures and indulge in some pretty dodgy dealing.

I have no problem with retail banks. They are not included in "banker bashing". Merchant and investment banks however are the spawn of Satan. I worked for a while in the futures and options industry. It was full of wankers over testeroned men who believed their worth as a person was tied up in how much money they made, that women were objects to be bought and sold along with the financial products which most of them would admit to not understanding at all.

But maybe I'm biased.

i agree, sure the banks are greedy, but so are we

100% mortgage, yes please
10,000 loan, yes please
buy now pay later, yes please
new kitchen, why not? will add to mortgage

credit crunch was down to collective greed, we have a role too

I don't understand how banks can just increase people's overdraft the way they do. I think that is immoral. (My husband set an overdraft limit of £0, the bank tried to say, ok, no overdraft, but he was insistant that they set the limit at zero because apparently there is something in the system that prevents them changing a £0 overdraft themselves, not sure how though..!!)

BUT..... coming from Australia where overdrafts are actually much more difficult to get, it is easy to get into a situation where there is temporarily not enough funds in your account to pay a bill, and then a payment doesn't go through, and you end up with a bad credit reference because you have had a number of missed payments. How many of you are willing to risk that???!!!

Also, up until fairly recently we used to have to pay $5 a month for the privilege of having a bank account, unless you also have savings over a certain value (about $10,000 I think, but could be wrong) or a mortgage with the bank. Any additional accounts still had a monthly fee so if you had a separate bank account for savings you would be charged.

If you took cash out from a different bank's cashpoint you would be charged for taking the money out. If you had more than a set number of withdrawals (usually about 6 I think), you were charged a fee for every transaction after that. Oh and we had two lots of government duties to pay on transactions.

So.... how many of you would be willing to give up your present system for what I had to live with for so many years????!!!!

I work for a high street bank and we are paid a monthly bonus on any loans/credit cards/fee paying accounts/mortgages etc we sell. I hate the job, I hate trying to get people to take out a loan at 18% to pay off a credit card when i know full well if they shopped around they could probably get a 0% credit card deal.

The pressure to sell is awful BUT, the money is good.

slug - I tend to agree. The personal behaviour of people who work in wholesale financial markets is dreadful at times. Not all people of course but DW and I know having worked in The City that the testosterone fuelled 'my bonus is bigger than yours' behaviour is the major reason we are where we are now with our financial crisis. Few cared and no one had the courage to say STOP!!

I do also think it wrong that High St banks are allowed to sell financial products at all (other than loans and deposit accounts). Complete conflict of interest and a lot of good people who used to be branch managers in High St banks left because of the pressure to sell.

chitchat - exactly, that is how it is in most countries. I will treasure my free banking in the UK as long as it lasts.

I've been with my bank 9 years and they've never offered to raise my overdraft. I've never used it though.

chitchat - I lived in Japan for a few years and the only card the banks will give you if you're a foreigner is a cash card - no chance of credit or debit cards and definitely no overdraft. Likewise, the banks didn't all work together so you had to hunt out compatible cash machines where your bank card would work at all.

It was a hassle, but because of that it saved me a FORTUNE. It's one thing if you're out shopping to just impulse buy and hand over your card, but if you have to slog off to find a cash point, get your money out and come back then half the time you realise you didn't really need it in the first place.

So I'd go back to that in a heartbeat - a bit of inconvenience for a lot of saving, but the UK isn't set up as a cash society anymore, and it's a massive hassle to just have a cash card here.

NanBullen

dont be ashamed, but I can see see through my bankl its so funny, you call them, for something and then they try and have a little "chat"
do you want to change bank account, NO
so you want..NO!

bless em for trying, but soo unsubtle