Mike Wolfe: Banks should loan money to create jobs – not more profit
DO YOU remember the days when bank managers were trusted local people?
They knew their customers and learned who was likely to be successful in the local business community.
The managers were happy to lend to those who succeeded and would give advice to those whose ideas seemed unlikely to make it in the difficult world of business.
Local bank managers would stay in their jobs for many years.
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They were guaranteed a respectable place in the community because everyone recognised the importance of their role in safeguarding our savings and financing job creating ideas.
Sadly, those days have gone.
Professionalism in some banking sectors now means having a bottle of Bollinger after work on Friday.
Values are no longer what you adopt with your customers.
They are what you can sell the bonus shares for.
The Swedish company Handlesbanken, which has a branch in Stoke-on-Trent, still have managers who know their customers and make decisions about lending.
The Hanley Economic and The Co-op pursue principles rather than profit.
Sadly, though, most bankers are what used car sales people used to be. Smooth-talking devotees of short-term personal profit.
The new breed of bankers are controlled from the centre by nationally set targets and profit margins.
They have become too big to fail and their target is to empty our pockets into their coffers.
All of this makes me suspicious when I hear that the regional director for RBS in the Midlands, said last week: "Where there is an opportunity to lend we have proved we will try harder than any other bank to support growth."
He was blowing the bank's trumpet about the way they were now lending to small businesses some of the money that the Government had given them.
RBS and NatWest says it has helped 222 small and medium-sized enterprises (SMEs) in North Staffordshire benefit from more than £28 million since August.
The first thing to say is that this sum is peanuts. It is a tiny proportion of the money they have made in 'casino banking' in the same period.
The bank claims that their customers have saved £666,000 through rate discounts and the scrapping of fees on loans.
This figure is interesting in itself because it represents about 2.5 per cent of the total amount loaned.
They don't tell us how much they have actually charged the borrowers but you can bet your life it is more than the discount.
In other words, they are charging hard pressed local businesses more than five times the Bank of England base rate for the capital they need to provide local jobs.
That is hardly playing their part in rebuilding the economy which they destroyed.
Moreover, this new public spiritedness is happening because they have been loaned specially cheap money by the Government's Funds for Lending scheme (FLS).
They have also benefited from the printing of money under the quantitative easing project which has allowed them to pretend their balance sheets are worth more than they are.
This may sound a bit technical but the underlying message is clear. Banks that are owned by the public should be forced to use their massive financial muscle to lend money which creates jobs rather than mere profit.
Bonuses should be based on jobs created for the nation rather than profits for the bank.
Banks should be encouraged by Government to take risks in their commercial lending so that quirky start-ups or medium-sized businesses ready to expand can do so.
The Government could use its muscle as a major shareholder in some of the banks to make this change happen.
The rest of us could also influence banks' behaviour by moving our accounts to those banks or building societies owned by their members and run for the public good.
Experts tell me that people are more likely to get divorced than to change their bank.
That may be true, but both things can be done and it is no good complaining about bankers' greed if your monthly pay cheque helps to satisfy it.