A rant about banks...

Split from this thread and moved to Letting Off Steam - ClubMan.

Having read this thread I can only comment that there are many people who think that lenders are only there for the benefit of us all, I mean we get to buy shares in them, we can borrow from them and they are soooo nice to us all.

Absolute crap! First of all I differentiate between Banks, Lenders & Credit Card companies.

I should also put in loan sharks here - they provide a lending service to those people who need to borrow.

And this is where I have my problem with all of your sanctimonious twaddle.

I have only returned from the UK this year but things that jump up at me:

Ansbacher
Haughey & AIB
Ben Dunne
Eddie Hobbs's bit on the Bridge on the motorway round Dublin

Read "this great little country of ours" for some great examples.

There is an Elite in Ireland made up of Banks, Politicians and "developers" amongst others and the same exists in most other countries. Take John Major and the Carlyle Group for example. But business & politics mix big time. You donate to my party and I'll look after you.

Now there are a few types of people in my book

1. Those that are loaded and paying loans back & taxes is a game.
2. Those that are loaded and do things properly & ethically
3. Those who (get by - comfortable) and hope to get off with as much as possible cos they see No.1 on my list getting away with it.
4. Those who (get by - comfortable) who pay everything religiously
5. Those who have not enough who have no option but to fly by the seat of their pants and see No. 1 on my list getting away with it.
6. Those who have not enough but are happy "We were poor but all 13 of us living in cardboard box in middle of motorway were happy"
7. Those with no equity, no jobs and only hope is keeping afloat.



It is important to remember that we are all not able to borrow from a bank. I personally know an old lady in London in 1985 who used to borrow from the "Catalog Man" to make ends meet. She had worked all her life till arthritis crippled her and she got pensioned off by The Underground. Her pension was not huge but her living expenses outweighed her income and she had no lifestyle. She sat in front of the TV all day, no cigarettes, no beer etc. Just rent, council tax, food, electricity etc. So she ended up borrowing from the catalog man. On a Saturday he would come around and collect £2 a week from her. Her crime? She needed to borrow £50 to see her through the winter fuel expense and the APR on this? 100%. When all you sanctimonious pious self centred "you should pay it back" types start sermonising you might do well to remember how a person gets themselves in this mess. It is not always a champagne lifestyle.

I also was tempted to work as a catalog man 2 years ago in Milton Keynes when I'd recovered from my illness and could not stay in I.T. (Work related Stress) I had been offered the job and refused it on ethical grounds because I could not justify 98% interest rates and their impact. Now this was not a loan shark but Moores Catalog - a division of the GUS group or ARGOS to you and me.You are the same people who have shares in Argos. I don't suppose you have any problem with 98% markup at the expense of the vulnerable.

Now I look at my situation. I ran up debt whilst ill and am currently paying £40 off a month on a £25K debt. The 25K was not because of my illness but loans I was servicing happily till I got sick for nigh on two years. I have every intention of paying them back in my time. But for now the 40 a month is all I have until I get my inheritance.

Would the debt be as big as it is if my insurancew paid out for more than one year? No. Was I able to get a two year policy or longer? No.
So what happened? Well the Bank got their insurance to pay out and sold the debt as did the CC companies. So somebody else owns my debt now. Wish I could buy it at the rate they paid for it.

Now this leads me to the next bunch of leeches. Whilst I was ill and trying to recover (whilst debt was mounting adding more pressure) I was at home watching TV to try and get my mind concentrating on things again. My wife counted 38 ads for loans in one hour. Look at these ads....Essentially it is a case of "look how deep in sh*t you are - come and borrow from us, (in small print - we can take up to 4% commission) and scharge above normal rates of APR" with carol vorderman adding respectability(?) to the shylocks getting these people into an ever decreasing spiral.

Now I am for responsible lenders doing responsible things and Matt Barrett is my hero. " Barclays' boss, Matt Barrett, seems to have been regarded as a bit of a card for admitting that he would never personally use one of the plastic rectangles with which 9 million of his customers pay for purchases they can't afford. Business analysts believe that he may have "Ratnered" his bank".

Now if the Banks know that their customers can't afford these card purchases and they still issue them.............

It's all well and great to criticise those who default but it is not clear cut and lenders have a moral obligation to be ethical and responsible in their lending. These institutions force the weaker and vulnerable in our society to borrow to keep head above water by putting off the inevitable sinking.

With all the advertising about smoking & drinking being bad for you why is the government or the banks not advertising in the same manner? Cos it does nothing for the well off - thats why.

So to those of you who are concerned about your share values and your pensions have a thought for those to whom shares or a pension is but an ethereal concept.

Now until those at No.1 end their corrupt ways and lead by example, the banks and the more salubrious institutions practise responsible lending and those in power find ways of easing the poverty traps (both those of the bottom incomes and middle incomes) there will always be people trying to get away with it and ALMOST justifyable in their actions.

Woo Hoo - I made "letting off steam"

Yeah right on brother. Stick it to the man. Bring on the revolution.

And take it easy, you could stress yourself out again!

There are some very valid points in this post. One interesting point that I heard raised recently was that there are a significany number of low income families who can not open a bank account for a reason that I never would have guessed.

They dont have the necessary paper work. Many people have no passport because they have no intention or means to ever travel anywhere that would need one. They also don't have a driving licence. In some cases they don't even have utility bills.

So, they are effectively ruled out of accessing credit that you or I would use. As was pointed out in the other thread, it's virtually impossible to survive in this society without credit, so we drive them into the hands of Money Lenders that we licence to operate APR's of 100%+++++

-Rd

quarterfloun said:

.. lenders have a moral obligation to be ethical and responsible in their lending.

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Is this not naive ? Like Rodney King trying to quell the LA riots with "why can't we all just get along" ?

Commercial banks are public companies that have a primary responsibility to maximise shareholder value. A 'moral obligation' cannot be measured or valued in the balance sheet.

I'm not defending their attitude, or the mentality that underpins it, just admitting the reality.

There is an evident gap in the market between commercial banks and moneylenders. If it were profitable to operate in that gap, it would be filled. Since it is not, then it is (argubly) the role of the public service to fill that gap.

Quelling the riot I take your point, but before it started............different kettle of fish. We as a race should strive for better rather than succumb to second best.
Thats what makes winners and losers of us all. When I die I'll know I tried to make this place better for those that follow in many very small ways. MLK I ain't

Preying on ill informed, pressurised, terrified people is not the way forward for any commercial business. Look at the real reasons for Iraq to see where all this going to end.

Were there enough people that would use a real ethical bank I would hope that most would take our business there. I would rather that the profit from my transactions covered a persons unfortunate circumstances rather than fill the pockets of shareholders who have enough in the first place.

then it is (argubly) the role of the public service to fill that gap.

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Or to narrow it. If people are excluded from banks due to (for example) money laundering legislation, then we should be looking at the side effects of that legislation.

I find it funny that a minimum interest rate for Money Lenders is specified (23%)
why would that be the case? Is there any valid reason for specifying a minimum?

-Rd

Anything less and you're not a moneylender, but a "Financial Institution"?

Why not allow money lenders to charge less if they want?
I presume the reason is there is less Regulation of Money Lenders?
But even that doesn't seem right? Surely people charging APR's of 23% should be
MORE regulated not Less.

Did the Banks lobby for a minimum APR for money lenders to stop them competing with the banks?

-Rd

Think it's just a classification, but I agree with you completely.

daltonr said:

I presume the reason is there is less Regulation of Money Lenders?

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Can you explain how there is less regulation of money lenders than other credit providers please?

quarterfloun said:

Were there enough people that would use a real ethical bank I would hope that most would take our business there. I would rather that the profit from my transactions covered a persons unfortunate circumstances rather than fill the pockets of shareholders who have enough in the first place.

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How do you define a "real ethical bank"?

There are plenty of ways to support people who have found themselves in unfortunate circumstances, you don't need to leave it to the banks.

Why do you assume shareholders "have enough in the first place"-how much is enough? What about pensioners (who hold shares indirectly through pension funds)? What about people who have put their money into shares rather than a home of their own? Do any shareholders deserve to make money from holding shares?

quarterfloun said:

Were there enough people that would use a real ethical bank I would hope that most would take our business there.

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Some might describe the Credit Unions and mutual societies as ethical banks in that they have a cooperative ethos and are not primarily driven to maximise shareholder profit. In any case their "shareholders" are their members anyway so they stand to gain from any increases in profits. However perhaps it's telling that many CUs and mutuals tend to charge higher credit rates on loans and mortgages than other lenders, in particular the Plcs who are driven to maximise profits and shareholder value. In addition many CUs still refuse to quote standardised APRs and some mutuals make slightly misleading claims about offering the lowest rates (standard variable rate even though there are lower trackers on offer). In this case consumers are arguably getting a better deal from the mainstream lenders than from the cooperative/mutual alternatives which might tend to undermine quarterfloun's argument.

With all the advertising about smoking & drinking being bad for you why is the government or the banks not advertising in the same manner? Cos it does nothing for the well off - thats why.

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As for the alleged lack of consumer education/information in relation to personal financial matters and debt etc. have you ever checked out what the likes of [broken link removed] (which is funded by levies imposed on the banks), , MABS and the offer in this respect?

But for now the 40 a month is all I have until I get my inheritance.

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I find it a bit ironic that somebody who is directing abuse at those who he considers "sanctimonious" for having certain views or culpable for exploiting the less fortunate by virtue of their direct or indirect shareholdings in financial institutions is the one who is biding his time until "his inheritance" is paid out. I don't know about anybody else but I would consider GBP£25K+ inheritance symptomatic of privilege myself. By the way - do you know what this inheritance is invested in at the moment and how will your conscience deal with the possibility that at least some of it is held in shares in financial institutions?

I would rather that the profit from my transactions covered a persons unfortunate circumstances rather than fill the pockets of shareholders who have enough in the first place.

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Why not buy shares in a bank and donate them to charity so? Maybe do this with whatever's left over of your inheritance once you have cleared your debts?

Can you explain how there is less regulation of money lenders than other credit providers please?

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If I knew then I wouldn't have been asking about it here. The only reason I could see for having a group that are barred from competing directly with the financial institutions is that they are able to operate without some other restriction that is placed on the financial institutions.

Do you know why money lenders are forced to keep their APR's above 23% and as such are prevented from competing with Financial Institutions?

Perhaps the levy that finds IFSRA is not applied to them. That might be all there is to it.

-Rd

daltonr said:

.. Do you know why money lenders are forced to keep their APR's above 23%

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No
but perhaps ..

.. it is to to ensure a minimum level of return for those choosing to operate in this sector ? Comparing a moneylender against a commercial bank is not valid. A commercial bank will ensure risk is minimised and set up a direct debit or standing order to hoover the repayment out of your account. That's real hard .

A moneylender has to go door to door and may have a higher level of write-offs. The methods adopted to 'encourage repayment' or 'discourage default' may, in cases, be open to criticism, but the point I am labouring to make is that the costs of operation of each are not directly comparable.

daltonr said:

If I knew then I wouldn't have been asking about it here.

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You asked why there was less regulation which assumes a priori that there is less regultion. You did not ask if there was less regulation. That is my point. Is there actually less regulation of money lenders than other credit providers? Only if there is less regulation does it make sense to ask why this is the case.

Do you know why money lenders are forced to keep their APR's above 23% and as such are prevented from competing with Financial Institutions?

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No. Perhaps IFSRA have the answer if you want to try them?

>You asked why there was less regulation

No I didn't. I asked why there aren't allowed to chagre less.
I said I presumed it was because there was less regulation. I don't know for a fact that there is less regulation.

Forget it. We both agree that we don't know WHY they have a minimum APR of 23%. And noone else seems to know either, so I'll follow it up myself with IFSRA.

-Rd

Clubman - my inheritance is sat in a solicitors office gathering dust until paperwork is completed. It is all cash and the property is sold. So as soon as the solicitor / probate dept get their fingers out then the sooner I can pay back.

As for the shares - I would never invest in them because I believe that they are vulnerable to acute market trends moreso than other investments. However I will freely admit that I have no clue where to put my money. It's obvious to me that the higher the potential return the greater the risk. Having been nailed by illness before I want my investment to be safe, accessible and provide a return. There are so many opportunites for fraudsters to get hold of your money that I'm afraid to use a Financial Adviser, I'm unlikely to put it into a bank because the rates are poor and the money will not provide enough to buy a second home for renting out without tying up my money and exposing me to the potential of 15% interest rates which I experienced in the 80's.

Regarding those agencies you suggest, fine, but they don't stick counter ads on the TV. For example you see on TV ads to drink sensibly, smoking kills etc. Have you seen any ad on TV saying borrowing may not be right for you?.........

quarterfloun,

Depending on age, attitude to risk etc, it's perfectly rational to not want to dip into shares. But even within the world of shares it's possible to find relatively low risk investments that will yield you an income, but to be honest the income on 25K (am I right is saying 25K) isn't going to set you up for life, and you might be better using it to pay down debts.

I woudn't be too concerned about Financial Advisers being crooks. You can find a QFA on the IFSRA Website (there's a directory of QFA's) and you should be pretty safe.

Make sure your QFA is recognised by IFSRA and you can be at least reasonably confident. And of course ask questions about commissions etc, whenever you are sold ANY product.

Most important of all is spend a little time reading up on financial issues, it isn't hard to educate yourself, it's actually quite an interesting topic in itself. And it'll greatly increase your confidence when dealing with Financial Products and services.

Don't stick your money under the mattress, it's a sure fire way to lose it's value. I'd prefer to see you play Blackjack, at least you'd get a bit of entertainment.

-Rd