The FT's reporting free banking is getting harder to find.
Bonuses cost a lot, you know.
And you're paying for them.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Why should banking be free?
a) because you can’t function in the modern economy without it, so it’s a human right
b) because banks get free use of your money
c) because banks can clearly afford to provide it for free
d) that’s because we give them the right to create money: this is the quid pro quo in exchange
e) ditto with regard to their banking licences from which they clearly make excess and monopoly profits
Want any more?
I could keep going for a long time.
Counter arguments?
a) there are lot of things that you can’t function without in the “modern economy” – or life in general – doesn’t mean it should be free. Should clothes be free? Food? Although it is amusing to see free banking being mentioned as a human right alongside Habeas Corpus, free speech etc.
b) I don’t know about you but my bank pays me interest on credit balances – maybe you should shop around – so it doesn’t get my money for free
c) non sequitur. I could afford to give you £1,000 if I wanted to but I’m not going to.
d) you’re confusing government with individual account holders – they are NOT the same
e) again that is matter between the government and the banks which could be solved by taxation if a government chooses to – nothing to do with individual account holders.
If someone provides a service to me (and holding money is just have) then I have no problem in principle for paying for it.
However, as someone who never goes overdrawn I am quite happy to have free banking whilst people who go overdrawn subsidise my free banking by being hammered for £20 every time they go overdrawn.
I’ll ignore the nastiness of your tone and instead concentrate on the real issues
a) Having access to the means of exchange is fundamental to survival in the modern economy. Banking is the means of exchange. Ergo it has to be ahuman right – ahead of those things you note procured using its services in many cases and therefore more fundamental in some ways like them
b) government grants the right to bank on behalf of individuals – government acts as agent for us all in this respect – and the duty to supply si therefore universal in exchange
By reducing everything to the individual you entirely miss the point
Was that your intention?
Counterarguments:
a) because you can’t function in the modern economy without it, so it’s a human right
You can’t function without food, water, electricity, and a mobile phone. Should those things be free too?
b) because banks get free use of your money
No they don’t. They pay you interest for ‘using’ your money. But really they don’t ‘use’ it as much as keep it safe. IF you don’t like it, put your money under your mattress where it can burn in a fire.
c) because banks can clearly afford to provide it for free
Yes let’s apply that slippery slope argument to every enterprise in England then. Flush all the profit out of restaurants and pubs, I want to eat and drink at a discount – heck they can afford it. Flush all the profits out of brothels, I want to fornicate for a discount. Heck legislate that accountants should prepare books for $2/hour – you have enough savings Richard, you can afford to prepare my taxes for free. Filing my taxes is a human right, I can’t function without it!
d) that’s because we give them the right to create money: this is the quid pro quo in exchange
Well we do give them that right yes, but to who’s benefit? To our benefit naturally. Not everyone is flush with funds like you and can buy a house by paying all cash up front, or buy their tractor and car with cash-in-hand. So if you want financing for your house? You want financing for your car? Let the bank ‘create’ money, and THAT is the quid-pro-quo for the deposit ratios that ‘make money’.
e) ditto with regard to their banking licences from which they clearly make excess and monopoly profits
If there is in fact a monopoly, then the banks should be split up. You don’t tackle a monopoly by making the underlying product free to consumers. Was Microsoft forced to give Windows away for free? Was British Telecom forced to give free phone service? Was AT&T forced to give free long distance?
Want any more?
Well black knight, that’s 0/4, so save yourself, unless you insist It’s just a flesh wound?
See my reply top Patrick Howarth
You too utterly and I presume deliberately miss the point by arguing either in absurdum or absurdly – that’s the problem of right wing libertarianism – you just make yourself look stupid in the process by drawing false analogies
Richard – one thing we learnt from Darling’s bonus tax (but most knew this already) is that well over 50% of all bonuses paid in the UK come from US investment banks (JP Morgan, Morgan Stanley, Goldman Sachx, etc.). The majority of the rest is paid by European investment banks (UBS, Deutsch Bank, Credit Suisse, etc.).
Only a small portion of bonus in the UK are paid by British universal banks, mainly by RBS and Barclays. These two institutions (especially Barclays) actually pay most of their bonuses to non UK-based executives, principally in the United States.
JPM, Goldman Sachs, Deutsche Bank et al., the largest bonus payers in the UK do not have a local retail or commercial banking business. They do not offer checking of savings accounts, overdrafts or loan facilities to either individuals or corporates. They never have, and in all likelyhood never will.
There is close to zero correlation between the level of bonuses paid in the UK and the local availability or cost of retail banking products. That is a fact.
And it is utterly irrelevant
It’s a fact that these banks exploit their right to trade for excessive gain, worldwide
Free banking is one small return
Richard – of course it is relevant. How can you write that the British public is paying for bonuses out of the cost of local retail banking products, when it is blatantly obvious that retail banks do NOT pay bonuses?
But more generally, you fail to understand that retail (or commercial) banking IS NOT what JP Morgan or Deutsche Bank actually do to earn their money in the UK (or, generally, worldwide), and it is questionable whether they would be able to actually operate a competitive and efficient retail service. There are many other professions that earn (perceived) abnormal profits: lawyers, entertainers, athletes, etc. If your concern is about the level of excessive gain, why not ask Wayne Rooney and his agents to run a retail bank? They are about as experienced in writing SME overdrafts as Goldman Sachs ever was.
So Barclays and RBS and Lloyds don’t pay bonuses
I think you’ve lost this one, badly
Game, set and match to me
And it really does not matter if others don’t supply retail banking – I’m not asking them to do it for free then
So again – an absurd case on your part
Richard – so you are now stating that Lloyds, RBS and Barclays have stopped providing free banking in order to pay for investment bankers’ bonuses.
This is neither backed by the FT article, nor by the facts at large. All three institutions continue to offer extensive free services.
Read the story
They’re harder to get – that’s what it says
And I reported that fact
It’s you who is fabricating
Let’s do a little math here.
Barclays and RBS (the only major UK-based payers of banking bonuses) have a combined market share in retail banking of 30-40%. Let’s assume that there are about 50 million retail customers, that RBS and Barclays charge a “fee” for basic banking services of about 20 Pounds and generate a 100% margin on that fee income. Adding all these unrealistic assumptions together would mean profits of less than 400 million Pounds for Barclays and RBS, so (a lot) less than their combined bonus pool of around 2.5 billion Pounds (in fact not even 20%).
Also, the 400 Pounds is less than 5% of the total bonuses paid in the London banking industry in 2010. Most of us would call this a rounding error. Let’s move on here.
I rest my case
They can afford to provide free banking
Glad you so clearly agree
Nationwide Building Soc give free banking, but no mammoth bonuses…. What’s so difficult about that, then?