- The Guardian
- Issue #2059 03-07-2023
Photo: Ken Teegardin – flickr.com (CC BY-SA 2.0)
“Robbing a bank’s no crime compared to owning one.”
Private banks exist to make fat profits. Social conscience does not generate profits. If maximising profits means people are made homeless or driven into poverty by massive repayments, then that is seen as in the interests of shareholders.
Their failure reflects the bankruptcy of policies that are based on “market forces” and the inability of the private profit system to address the needs of people and the overall economy. While the accumulation of maximum private profit remains the one and only goal of banks, they cannot but fail the people.
We need a bank that exists to provide people with a service, that has as its charter a social responsibility to assist and support people, small business and family farmers.
Following privatisation of the publicly owned state and Commonwealth Banks, all semblance of real competition went out of the window – the Big Four banks gained a tight monopoly over the industry. Fees were raised, new fees introduced, service deteriorated and new investment products were promoted that have nothing to do with genuine banking.
One of the reasons banks got into so much trouble and carry such heavy losses on their books is that they have not stuck to banking. Their problems lie in the huge debts and losses they raked up in takeovers, speculative activities such as derivatives, and loans to private equity and other corporate sharks for takeovers and expansion.
What is needed is a bank that offers banking services. A bank that takes savings deposits, pays interest on them and receives interest on the money it lends people and businesses. One hundred years ago banks made their income from margins – the difference between the interest they paid on deposits and the interest they received from loans. This difference also funded their costs. We need a bank that is a real bank, providing banking services, without the fees, but with guarantees on savings.
People need certainty in their lives. When they take out a home loan they need to know what their repayments will be in a few years time; that they will not rocket beyond reach. They need to know that the bank will not turf them onto the streets if they become ill or unemployed and fail to make mortgage payments.
People need to know that their savings are secure, guaranteed by government. The government needs to know that when it uses public funds, as it is doing now, it has control over where those funds go and how they are used. That it can ensure their use is socially desirable and socially beneficial.
Rural people need a sympathetic bank that treats them well, can accommodate periods of flood and drought.
Small business needs a bank that can provide them with a reliable service that recognises their needs.
Government needs a bank that will lend where investment is needed, that has the confidence of the people to sell bonds and raise the necessary finance where needed to carry out government policy.
There is only one type of bank that can do these things, a publicly owned and controlled bank – a People’s Bank. That is what Australia needs right now.