11
Sep
09

On air: Do banks have too much control over your life?

bank

We’re on TV at 1530GMT on BBC World News, and then on radio at the normal times. Today’s show is part of the BBC’s Aftershock season. We’ll be discussing whether you feel banks are helping or hindering your efforts to bounce back from the economic downturn. We’re looking for your personal stories, and if you work in banking you are especially welcome. So this isn’t about whether they made mistakes that contributed to the crisis. I think we’re all agreed on that.  This is about now, and if they are providing enough support to those of you who are struggling.


91 Responses to “On air: Do banks have too much control over your life?”


  1. 1 gary
    September 11, 2009 at 13:40

    Banks have no more control over a person’s life than do fast food restaurants or Middle Eastern oil Shrieks. Ronald McDonald doesn’t make people fat, the Sheiks do not cause global warming, and banks do not cause personal financial ruin. Guess who is responsible.
    g

    • 2 Angie (US)
      September 11, 2009 at 18:24

      Greed is the central topic in this debate. Greed not only on the part of the companies and banks but also on the part of the people who were taking loans when they knew they couldn’t afford it.

    • 3 Jack
      September 11, 2009 at 18:37

      Gary,

      I think that depends on what you mean by “Control.” You’re right that no one shoves loan money into your pockets, but I don’t get the comparison between the corporate financial cartels with McDonald’s. You can eat healthy by cooking at home, going to subway, even ordering through Nutri-Systems. Banks don’t only control loans, but all money. Try cashing your check at a bank where you’re a non-account holder and you’ll have to put your thumbprint on the face of the check. The government has to arrest you to take your fingerprints. You might have to give your fingerprints to get certain jobs, but for those of us who like our privacy and anonymity, being fingerprinted every time we take part in the economy seems quite controlling.

    • January 30, 2010 at 11:09

      I have to strongly disagree with Gary’s statement on the grounds that it is very difficult to pay bills these days without having to go through banks. Banks seem to have everything “sewn up” (perhaps stitched up would be a better term) and the consumer is virtually railroaded into dealing with banks, simply because there is not enough consumer choice in having other easier ways to pay bills etc.
      We pay handling charges for certain bits of business within banks??? Handling??? Bank staff are already being paid to do exactly that! That’s akin to a pie seller charging you twice…once for the pie and twice for putting it in a bag and giving it to you! Why then are we paying charges? My own personal beef is that there is not nearly enough choice for the consumer…who is forced into using banks because they have the lion’s share of finance and I think it’s high time people withdrew their custom from banks, voted with their feet and force these bloodsuckers to play fair and stop ripping us off with exorbitand and often unjustifable charges! I know from talking to an ex local bank manager in my town that he left (a long time ago now) because he saw the way banks were heading, where local banks were taken over by large conglomerates and the greed factor kicked in…customers simply became a means of suqeezing more money. Unfortunately, I believe until this mad craze of ‘gobbling everything up in sight’ and giants like Santander, HSBC et al are reigned in, we will all suffer the long term financial consequences. It is crazy that banks like Clydesdale (a district in Scotland and Halifax bank In England, are owned by foreign conglomerates, then we had Abbey…swallowed up by Santander???? (Spanish)
      It’s time we had private local banks which are ran locally and NOT floated on the stock market, making them easy targets for aggressive takeovers.

  2. 5 patti in cape coral
    September 11, 2009 at 13:45

    It depends. I fell behind on my mortgage, and my mortgage bank let me skip a month, then add payment onto my other payments for six months, which helped me a lot, but this is not the norm. Many other people that I know tried to negotiate with their banks and ended up losing their houses because the bank was completely inflexible. In general, yes, banks have way too much control. That’s why I do the rest of my banking with a credit union.

  3. 6 Ann
    September 11, 2009 at 14:44

    Absolutely! When they have your money they make money for themselves with it and when you borrow money you pay through the nose in interest. Either way the banks a winner! In fact I’m so enraged about the control banks have over people’s lives that a few months ago I did some research on whether of not it was a legel stipulation in the UK that employer pay your wages into a bank account. And apparently it isn’t! It seems you can, under certain conditions, legally ask your employer to pay you in another way. I remember with great fondness the days of being handed your pay packet with cash in it and then paying all your bills with cash. No credit cards and banks creaming interest. I even know of people who bought and sold a house without any recourse to banks at all! Excellent. And I love the schemes whereby people do work for each other and it doesn’t involve cash, buying and selling at all! So if you are a hairdresser you might cut someone’s hair and that gets you so many credits and you can use these credits to have your car repaired or such like. Great idea and works really well in deprived areas🙂

    I can feel a revolutionary feeling coming on…

  4. 7 Steve in Boston
    September 11, 2009 at 14:46

    Gotta agree with Gary. If you’re looking for someone to blame for living beyond your means, look in the mirror.

    The problem is that so many millions of people have lost self control that the norm has become to live the good life in constant debt. Prices for cars, homes and other goods have risen beyond all reason to take into account that the average Joe could easily borrow money. Now it’s become impossible for most people to live without debt of some kind, and with credit now tight, many things grind to a halt.

    We can either take our medicine and let things painfully adjust back to normal, or we can force banks at the point of a gun to lend to all you bad credit risks . Obama seems to favor the latter. Guess how long that will last.

    The real problem is that there are no more grown-ups left to say “no.”

  5. 8 steve
    September 11, 2009 at 15:17

    Banks have a lot of control, but it’s our fault for taking out loans and living beyond our means.

    • 9 Jack
      September 11, 2009 at 18:20

      You’ll get no argument from me about people living beyond their means. And the banks lived within their means . . . how? They cooked the books, gambled and lost. The culture is all wrong, both in terms of interdependency and the allowance of the corporate financial institution to have the same rights (or better) as the citizen.

  6. 10 T
    September 11, 2009 at 15:22

    Yes they do. There’s been too much de-regulation, rampant greed. And nobody being held accountable. Now, more people in the States are switching to credit unions. What does THAT tell you?

  7. 11 Robz
    September 11, 2009 at 15:33

    I agree with patti in cape coral.
    I was working as much as I could,and doing my best to pay a mortgage.Then work dried up.My family was not living beyond our means.My job paid the majority of the bills,but when construction stopped,so did my income.Wells Fargo did not try to keep me in my home.Their employee who started to try to work with me,was let go.
    When the banks stopped financing prodjects,the jobs and homes were lost.In the US,the banks have been (bailed out) on the promise that they would get the ball rolling.
    Well,the ball is not moving.
    Banks control cash flow,and it’s barely moving.
    Rob in Florida.

  8. 12 Anthony
    September 11, 2009 at 15:51

    They have so much control because we allow them to. But with that debt, we prosper. It truley is a double sided sword.

    -Anthony, LA, CA

  9. 13 Tom D Ford
    September 11, 2009 at 15:54

    Over our individual lives no, over the lives of our general body politic yes.

    Bankers have no incentive to let people off the interest hook that they have baited people into, after all, that is the way they get their money, by conning people into buying loans they cannot afford.

    Bankers have no interest in solving the problems they created, their interest is in keeping that interest coming in, in keeping people on that loan hook as long as possible.

  10. 14 Leo from Kiev
    September 11, 2009 at 16:07

    As an insider, working at the central bank yet in early 1990s, i’ve come to grips with the evil nature of the banking mechanisms, aiming primarily at human vile greed for “more”, regardless of the need for it. Now the folks are to blame for their unbased greed. The sooner the debtors terminate any relations with the banks, even at their financial or any other loss, the better they will feel in future, securing some additional cash for current needs of their families, not the greedy bankers.Once folks begin to implement this strategy of getting rid of anything, connected with “bad loans” or any relations with the bank, the bankers would turn to live in squalor, paving the road to their oblivion.

  11. 15 Tom K in Mpls
    September 11, 2009 at 16:11

    They are a tool, not a power. In effect, they ‘level’ the amount of on hand cash needed by individuals and communities to do anything. Also they are a buffer for losses. We have recently seen that when times get hard they can suffer just like everyone else. The average bank is no more at fault than any other average business or person. The way they make money is by solving problems just like any other business.

  12. 16 Belinda in NC
    September 11, 2009 at 16:23

    Excuse me, but even a mortgage is living beyond your means. Do a quick calculation on how much of a mortgage payment is interest and how much is principal. Anyone with a mortgage is essentially renting their housing from the bank without the legal rights of a standard landlord-tenant relationship.

    Car loans – yup – beyond your means.

    Purchase a motorcycle, RV, boat, etc. with a loan – beyond your means and I’m sorry, but really, really bad decision to go into debt for a TOY.

    ANY debt is living beyond your means.

    • 17 Tom K in Mpls
      September 11, 2009 at 17:17

      Not true at all Belinda. As for mortgages, first look at the market. Growing fast is bad, you overpay and have no value when it drops. Dropping fast is good, wait till near the bottom and get a bargain. Modest movement is ok. This controls your exposure. Make a down payment of at least 10%. Never get a mortgage of more than 25% of your take-home income. If you are this responsible you will be fine.

      The single biggest issue is to keep your payments less than your investments.

    • 18 Roy, Washington DC
      September 11, 2009 at 18:14

      @ Belinda

      When I bought my motorcycle a couple of years ago, I could have afforded to pay for it out of pocket…but instead, I took out a loan for it (which I have long since paid off). Why did I do that? In addition to spreading out the financial hit, it shows up on my credit report as a loan that was paid as agreed — which makes me look better to future lenders.

  13. 19 patti in cape coral
    September 11, 2009 at 16:40

    @ Belinda – Yes, I have heard that said before, especially in regards to cars, but not generally toward homes. I can’t remember where I read it, but the idea presented was that it is justifiable to go into debt for a home because value generally increases, it is less justifiable to spend so much on a car, since it decreases in value as soon as you drive it off the lot. Still, I think it is better to be paying monthly into a mortgage for something that you will eventually own, if you can, instead of paying rent. I may be wrong, but that was written into my head from a very young age. So debt for a home I think is justified, considering how long the average person would have to save up to pay for it cash.

  14. 20 Sarah
    September 11, 2009 at 16:41

    Banks aren’t as bad as everybody says they are. They’re just made up of people who want to do what everyone does – make money. Sure, it wasn’t nice, but it wasn’t illegal

  15. September 11, 2009 at 16:43

    Every individual or organisation involved has to take responsibity for their actions,to put all blame on the regulators is an abdication of their moral duty.
    Mr.Fox The business of business is not just business they have to take moral responsibity for their actions eg companies who employed slave labour during WWII or people who just followed orders without thinking about their actions.

  16. 22 Kais Salhut from East Jerusalem
    September 11, 2009 at 16:47

    The problem is much deeper than blaming it on the bank or the regulator. The problem is in the fact that bankers are not dealing with their own money and do not have any long term interest in maintaining the bank. Their interests rightfully do not go beyond the bonuses they receive during the few years they are in office. Is it their moral responsibility to commit more to doing their business “right”? is it the regulator’s problem? and how? these are not easy questions to be answered by saying it is the regulator’s or the banker’s problem

  17. September 11, 2009 at 16:47

    Banks are like the accountants could be your best friend as much as your worst enimy led by the greed and bonus hungry motives they try to play on both sides and in times of crisis that you might be facing its rear ocasion where your bank would back you up. Changing terms and conditions is very common accross banks. They should be regulated.

  18. 24 Gorian
    September 11, 2009 at 16:49

    I have one simple question – since when did we stop holding people (bankers) responsible for their actions? Taking the irresponsible action of the bankers away from the cause of the crises and saying that it’s the government (regulators fault) is by itself and irresponsible and unproductive. It is quite clear that both sides are to blame. But the regulators were not the ones with the hundreds of analysts and managers who job was motivated by profits. Devices left to their own means would act accordingly and the bankers did just that, so they are the ones to hold the majority of the blame.

  19. 25 Shungu
    September 11, 2009 at 16:49

    The Biggest problem is peoples’ desire to catch up with the Jones’. We are always trying to improve our present well-being, even if it means borrowing amounts that are unrealistic. Bankers were only happy to respond to peoples ‘needs’.

    Yes, bankers are partly responsible for baiting people into borrowing more and concotting shady financial mechanisms. But when we are experiencing a major boom like the one that was in progress, individuals get carried away into believing that things will not go wrong, no matter what.

  20. September 11, 2009 at 16:50

    Interest rates in Bulgaria just yesterday after presure form the Finance Ministry and the Bulgarian national Bank dropped the rate down before rates were climbing high. I don;t believe in the banking system the way it is today.

  21. 27 Davin McColgan
    September 11, 2009 at 16:52

    I have to say it is galling to hear the bank industry apologist spout his rhetoric.

    I have no problem with the banking industry taking risks. Lots of people benefit.

    However the majority of people do not. The majority of people do not have big investment portfolios. The average person only interacts with a bank in terms of savings, loans and mortgages.

    When the bankers take risks those with investments win. The average person does not. When the bankers lose, everyone loses. That seems very unfair.

    Savers and borrowers should not be made to pay the cost of the speculators. How can the sympathiser in the suit talk about lubrication when he misses the fundamentals of what most people on this programme use their bank for!

    Ivory towers!

  22. 28 Alice
    September 11, 2009 at 16:52

    While we all have a collective share of the blame for the current economic crisis, I think its rich that banks suggest that the blame for the current economic situation lies with the regulators. By that same logic, we all should go out and break the law and plead, in defence, that there were no policemen around to enforce the law! Banks have a responsibility to operate with ethics.

    To loan money to someone who you know is probably unable to pay, is irresponsible.

  23. 29 Naushad Shafkat
    September 11, 2009 at 16:52

    YES they have! I am a lawyer here in Karachi and I have seen people destroyed by banks. They pester you to take a loan or a credit card when you are doing well. And when your business goes down they see to it that you are down and out forever. In Karachi we have had people committing suicides to avoid the strong-arm tactics of the banks and the resulting disgrace to families. They hire goons to intimidate and INSULT people. And you should see them pandering people who are doing well to take loans. Why? I ask.

    • 30 Davin McColgan
      September 11, 2009 at 17:10

      It is a sad fact of life, but in India people regularly take their own lives because they have been spurned in love, because they failed their exams, because they were dishonoured, etc. It is quite a common thing in India so to use it as an example here is somewhat misleading.

      I agree the banks have a lot to answer for but think your argument lacks focus.

  24. 31 Bill
    September 11, 2009 at 16:52

    As someone whose retirement income has been wiped out. I am appalled at the insistence that the crisi is the fault of the regulators. Regulators are forever running faster just to stand still (at taxpayers expense) – and the legal system has regulation piled upon regulation because the incentives to find loopholes in the latest regulation are too great.

    I am sure the banks did nothing illegal – but what happened to morality? Is it really moral to inundate those incapable of financial discipline with offers of cheap finance and to take profit from it?

  25. 32 Kelly
    September 11, 2009 at 16:55

    The people in control of the finances are mostly educated in institutions of ‘higher learning’. I think that “business Ethics” is a requirement in most MBA programs.

    What has happened to personal responsibility in doing what’s right?

    Just as an individual is responsible for keeping their debt under control, so are the larger organizations responsible for not undermining social foundations.

    Our governments are ‘leading by example’. Can we deficit spend anymore? I don’t think we’ve commited our future generations to enough debt yet (not).

    It all boils down to GREED!!!!! How much money does one individual need to live out his days on this earth? Madoff?

  26. 33 Alan Towers
    September 11, 2009 at 17:04

    The Banks are culpable over the good years , they raised overdraft and credit limits without asking the customers, then when things start to go bad charges shoot through the roof although they are not doing anything to earn them One of your correspondants stated tat banks first job is to give loans I disagree their first task is to safeguard depositors money, they have failed miserably – interest levels have dropped to virtually zero whilst account charges go through the roof.

  27. 34 nora
    September 11, 2009 at 17:07

    Banks have added excessive fees, penalties and confusion to the problems of the working poor and elderly. In every generation they facilitate the gutting of persions.

    Banks court college students in their mailboxes with guaranteed credit without teaching the tool they offer. Even a hardware store will offer safety tips on a chainsaw.

    The banks are made of marble, with a guard at every door;
    And the vaults are stuffed with silver that the miners sweated for……Woody Guthrie

  28. 35 ARTHUR NJUGUNA
    September 11, 2009 at 17:08

    We used to trust banks/bankers more than our relatives. However from the 90s in my country most of the leading banks became irresponsible and introduced numerous charges. One of the leading banks made a rule of making hefty deductions on your savers account if there was no activity on the account even on a single month. Most people were never informed of this in advance and so the banks literally robbed large sums of depositors. As if that was not enough, they made bad loan policies that led to borrowers loosing their assets thus creating paupers of them. No. We distance ourselves from bank controls especially now that they are allied to political interests rather than commercial or economic.
    Only fools and the naivete believe their glossy adverts dishonest literature anymore. They are never trusted and they are mostly anti-development institutions.

  29. September 11, 2009 at 17:14

    North Dakota has had a state bank for ninety years. This bank can lend money and float bond measures, and the interest goes to the people. So here is a way to break the commercial bankers’ stranglehold.

    The credit economy depends on perpetual growth. If the growth stops, which it will sooner or later, the credit system collapses.

  30. 37 Gorian
    September 11, 2009 at 17:24

    The bankers are a private enterprise providing a basic for-public service. But theirs is not a social motivation, but rather a for-profit one and so they will behave accordingly. Like any other enterprise they will work around the set regulations and push the limits of their abilities to make profit. And at times they succeed and other times they fail. When they fail bad things happen. We get crises like what we are experiencing right now.

    In this global economy it is impossible to function (live) without basic financial services, just as it is impossible to live without water. And so Financial Services, like water, should be considered a basic human right. And as such should be regulated accordingly. Private players who enter and intend to profitize from this humanitarian area should be heavily regulated so as not to negatively affect the integrity of it.

  31. 38 Tom D Ford
    September 11, 2009 at 17:43

    “Do banks have too much control over your life?”

    This is not a new problem.

    The one time that Jesus lost his temper was with the money lenders.

    So if you’re angry at the bankers, you’re in very good company.

    If I understand correctly Muslims are forbidden by Allah to loan or borrow money, maybe someone will come along and explain why.

  32. 39 Roseann In Houston
    September 11, 2009 at 17:46

    I agree with the folks who say “look in the mirror”. The banks DO NOT control me because my mortgage is no more than what an average apartment would cost, I drive a vehicle that I paid off 8 years ago, and I pay my credit card bill in full every month. Which means that my credit score is over 800, so I get offers of loans and new credit cards in the mail almost EVERY DAY – and I shred them. My business with my bank is limited to my savings acct, checking/debit account, and Certificate of Deposits – they PAY ME to use my money! And I drop in to the bank every 6 months or so to ensure that I am getting the highest rate (which is practically nothing right now, but still better than me paying them) and when I am there they always try to sell me a home equity loan – and I laugh at them. It’s NOT easy to live cheaply, people around me who make much less than I do and drive big shiny new cars and are remodeling their homes look down their noses at me, but that’s the price I am willing to pay to be in control of my life.
    The quality that sets humans apart from other primates is self-determination, higher reasoning. Those of you who are saying that the banks are determining your financial situation…well, I think it’s clear where I am going with that thought.

  33. 40 Andrew in Australia
    September 11, 2009 at 17:52

    Of course they do for the simple reason that banks control money and the world operates on money and we survive only if we have money. They regulate money, they facilitate money. You cannot have a job in Australia unless you have a bank account, you wil simply not be paid or hired for that matter if you cannot provide an institution for pay deposits. Accordingly the banks are not our friends, they never have been nor will they ever be our friends. We need them and they know it. As banks are only interested in profit and banks produce immense profits because they handle vast ammounts of money such power corrupts them, their management and their policies. In light of this, their monopoly, you and I do not count for much and they can treat us they wish. We have to return to them so we are at their mercy, completely and utterly and they know it.

  34. 41 Bill
    September 11, 2009 at 17:55

    The rewards for finding loopholes in regulation are very high – so regulators constantly need to find extra regulatory powers. And who pays for this?

    Governance requires business to operate within a self-imposed ethical framework. My 2 18 year old sons at university being bombarded with offers of cheap loans they may never be able to afford to pay back is not “ethical” business. I seem to remember a time when bank managers were highly respected. Needless to say, they did not operate in the same way as current bankers.

  35. September 11, 2009 at 18:05

    Yes,

    Some Western countries have an over reliance on financial services,to the exclusion of manufacturing (the real economy where people have to get their hands dirty),
    Smug French,German and Indians have to realise there are problems with their economies that didn’t go away just because more dynamic countries had a temporary blip.

  36. 43 Mike in Seattle
    September 11, 2009 at 18:08

    When I make stupid decisions at my job, I get fired. When bankers and other financial workers make stupid decisions, they take others with them in the form of a global recession.

    One can live the most personally responsible life possible, but it won’t help you when you’ve lost your job due to actions beyond your control.

    I think it’s clear that banks have way too much power.

  37. 44 Jessica in NYC
    September 11, 2009 at 18:12

    Foe and Friend—I’d like nothing more if I never had anything to do with them ever again.

  38. 45 umesh
    September 11, 2009 at 18:16

    i dont know whats happening in the rest of the world but in my country more n more banks are opening. they are sitting besides the roads and requesting the people to open bank accounts. i dont know where will this trend take us.

  39. September 11, 2009 at 18:16

    Banks automated themselves out of business. Not that automation is bad, but it allowed the banks to fire expensive, experienced older people and hire cheap, uneducated young people. It is no surprise, then, that when mortgage brokers turned up on their doorstep with new mortgage customers, the banks didn’t have enough experienced people on their staff to perform due diligence.

  40. 47 Tom D Ford
    September 11, 2009 at 18:18

    The rich banker talks glowingly about “Creative Destruction”, completely ignoring the people whose lives have been destroyed by his financial schemes and scams.

    It is not “Creative” for anyone but rich bankers, it has been destructive to the world economy, to jobs, to small businesses, to large businesses, to real estate brokers, to nations like Iceland, to families.

    He benefits from hurting people.

    No thanks! Regulate him and his ilk to financial death!

  41. 48 Bill
    September 11, 2009 at 18:19

    I am not advocating people lining up on pay day to receive their pay in cash – as I remember over 40 years ago in the UK Civil Service. I am sure somebody will correct me, but I think something called the Truck Acts made it illegal for an employer to insist on payment other than cash. We were given inducements to open bank accounts and to agree to have pay paid directly into the account.

    From then onwards, we have all become more dependent on banks, and I agree – they close down branches, reduce services, use our credit balances without paying us for it and generally have not used their immemnse powers entirely to our advantage.

    Yes, we cannot do without them, and they know it.

  42. 49 Zain from Salt Lake, UT
    September 11, 2009 at 18:20

    Financial institutions and banks are essentially profit-maximizing entities, their byproduct is negative/positive impact on the economy.

    We need to break up “too big to fail” banks. So, the credit would remain fixed but their influence would diminish.

  43. 50 Peggy in Portland
    September 11, 2009 at 18:20

    I just heard Ross ask whether the banks or the legislators should bear the blame for the economic crash.

    Posing a question as an “either-or” situation doesn’t get us closer to preventing future problems or solving old ones when in truth there’s plenty of blame to go around. Of course both entities are in part responsible, and so are consumers of risky loans.

    Greed is an natural human impulse, and all of us would do well to notice our own and consider possible outcomes of acting on our greed. We have here a clear illustration of how unbridled greed harms everyone, even those who did not benefit from it in the first place.

    And passing the buck is an understandable human impulse, but can never get to the root of complex modern problems. Pretending that the entire problem lies in “that insitution” or “those other people” simply allows every institution and individual to go on making their own mistakes without a twinge of conscience.

  44. 51 steve
    September 11, 2009 at 18:23

    The Subprime lending in the US was caused by the government encouraging banks to lend to not so creditworthy people. Before then they wouldn’t loan and were accused of discrimination.

  45. 52 nora
    September 11, 2009 at 18:24

    Small businesses in my area were strangled while the banks got bailed out. Look in the mirror and ask if your bank is milking the young start-up entrepeneurs and students. Smugness on the part of people who are doing well should remember the questions they didn’t ask their bankers.

  46. 53 Lew in Ohio
    September 11, 2009 at 18:25

    It’s fine for the banks to defend themselves in these dire times. They must realize that if the small business and consumer doesn’t make it and the United States flounders even farther then their banks will collapse as well. We are all in this together and we need to act like it.

  47. 54 Keith- Ohio
    September 11, 2009 at 18:26

    People, particularly Americans, have a tendency to take out loans indefinitely and live beyond their means. Then, when the bubble of their happiness bursts, and they realize they have to pay the money back to the bank at the contractually agreed-upon rate, and the bank is inflexible, they become infuriated. In fact, this is SO common, that the Americans unable to repay their loans have caused a global recession! The entire problem is ridiculous, when you think about it.

    They have this sort of control over your life because you agreed to give them that control, because they let you buy your house 20 years before you would have originally been able to.

    It is a problem caused both by the bankers and the people, NOT ONE of the two, so stop blaming the bank for your debt for “making us believe we could afford the loans”. If ONE of the two groups stopped enabling each other, the problem would go away entirely. It just keeps perpetuating itself because both groups are so darn willing to be fooled into thinking they are rich.

  48. 55 Half-Not
    September 11, 2009 at 18:26

    Banks are making themselves safe! No one else.

    Banks created the loans, they were part of the greed, and now the banks are allegedly taking the high-road while punishing their customers. Banks already have a collective power that is not commensurate with the power of an individual, and they abuse this power to protect their interests, not the interests of the customer.

  49. 56 Belinda in NC
    September 11, 2009 at 18:26

    @Tom and @Patti

    You both have reasoned approaches to managing a mortgage, being responsible for your financial state, and I applaud you. The main point I was making was that many people do not acknowledge debt for what it is. I have had one mortgage in the past – one that I could pay on principal in addition to the regular payment. However, housing does not always increase in value, so even real estate does not yield a guaranteed return on investment. Your strategies help to mitigate downturns in the market – another positive aspect of your approaches.

  50. 57 Mike in Seattle
    September 11, 2009 at 18:27

    As far as lessons learned, banks appear to have learned how to jack up their fees, keep the interest rates on savings accounts low and ignore the phone calls of those trying to rework the terms of their home loans.

  51. 58 Tom K in Mpls
    September 11, 2009 at 18:28

    Anytime statistics are discussed, everyone makes the mistake of using fixed numbers. They are very misleading. We need to use percentages. If a corporation looses $5M, ooh, this is huge. If a small company looses $50k, who cares? Now if you see the corporation looses .002% and the small company looses 35% of their gross income. Suddenly you see that $50k is a disaster and the corporation has no issues.

  52. September 11, 2009 at 18:31

    Uhm…

    weren’t these derivative trading schemes created in the U.K.?

  53. 60 Robert in Indiana
    September 11, 2009 at 18:33

    You’re talking about the same abusive problems bankers give individuals, only business owners get some news coverage. Banks run transactions any way they want and cause the overdrafts that banks make profits from. If just ONE bank system had a deposits before withdrawals policy they would own the market.

  54. 61 Lisa from Pennsylvania, US
    September 11, 2009 at 18:36

    Its time for people to take some responsibility for their own actions and stop blaming others. I live in the States and I’m so tired of hearing people complain about the adjustable rate mortgages and other loans they can no longer pay. You must do the calculations and take responsibility for knowing you can afford the loan you’re accepting, otherwise you have no business accepting the loan.

  55. 62 Eric in France
    September 11, 2009 at 18:38

    Hello,

    banks have been greedy, because the system has allowed it. M. Clinton allows deposit banks and investment banks to regroup their activities. If you look at the charts of credit provided, the bubble started then in 1993. M. Greenspan maintained interest rates so low that it became normal practice to use credit as a common tool. People found great to have access to cheap credit. Pushed by demand, credit was excessively cheap and could be funded by the increase in several product prices. A home was a commodity as well as copper or bread. As long as it worked, no one mentioned the insanity of the system. We were all greedy in our own way

    If we do not want that to happen again, we must change the rules. The bonus issues is a political scapegoat. A certain type of contract was signed which we might think today was horrendous, but boards and CEO agreed. So pay now. Rather than playing rally now, if company with such contract are immoral for you, do not by their shares.

    P.S.: I am not part of the financial sector.

  56. 63 Tom D Ford
    September 11, 2009 at 18:41

    Bankers don’t “make” money, they just manipulate the money that other people have made by “work”, to the other peoples disadvantage and to the bankers advantage. Bankers are scammers, con-men, parasites on our bodies politic!

  57. September 11, 2009 at 18:41

    Banks create ‘fake’ wealth! It is often not real, not tangible!

  58. 65 Tom D Ford
    September 11, 2009 at 18:43

    Bankers don’t get bonuses for taking risks, they get bonuses for putting the risk on to other people whom they gull into unwise loans and credit.

  59. September 11, 2009 at 18:44

    Banks have no choice but to take pragmatic action. They should not make the same mistakes again. Just consider the scenario in America one year ago when loans were given very easily to clients as long as they owned one house. When clients defaulted in very large numbers, the banks had no recourse but to get help from the central bank. The whole banking system was in danger of collapsing. Fortunately banks are slowly coming out of the crisis. But the repercussions have been terrifying to say the least.

  60. September 11, 2009 at 18:45

    Hello Ros – I have been listening to your program since the start (and I try to listen every day) and it seems to me that this conversation should be dumbed down a bit and simplify the issue –

    Banks should be entitled to make profits and pay out bonuses to high performers. However, the question should be asked – those Bankers (individuals) that are hired to make decisions about lending SHOULD BE ABLE TO MAKE very key decisions on the MERITS of the BUSINESSES THEY ARE LENDING to. How can you ensure that a banker A has the NECESSARY background to make a decision about MY business (say, in the field of Education) in a short period of time?

    If my business were to approach a venture capitalist for early stage funding, we are put through SEVERAL months of scrutiny. I am just not sure the Bankers have this same approach.

    I have a line of credit for one of my businesses – this was obtained by me in less than 24 hours from one of the largest banks (JP Morgan Chase) in US. I guarantee the banker that pushed my loc through was unaware of my business’s long term prospects…thank goodness, I am experienced and prudent…but what about those that are less informed on the lending practices…this is the fundamental issue.

    -Suresh
    317-514-8031

  61. 68 Eric in France
    September 11, 2009 at 18:47

    Hello,

    a bank is not a friend. It is a business partner, therefore with who you do business. If you think of it on the same level as your friends or even boy/girlfriend, then I think you a fool.

    Also if you think that the bonus in a bank should be given 10 away, then what about the bonus of any salesman?

  62. 69 Tom D Ford
    September 11, 2009 at 18:47

    The banks are victims?

    The robbers are the victims of the robbery?

    In what parallel world?

  63. 70 Jack
    September 11, 2009 at 18:47

    My bank is currently neither friend, nor foe: we have a civilized arrangement. I make my car payments on time and they don’t repossess it. I have transportation that I will pay for up to three times its original sticker price and the bank makes a tidy profit. It takes more than a financial arrangement.

    Who is the fool on air who actually called banks “victims?” Are we supposed to take up a collection for their families, or just cry for them?

  64. 71 John in Salem
    September 11, 2009 at 18:47

    I’ve recently lost my home to foreclosure and filed for Chapter 7 bankruptcy. Two days ago I received an application for a credit card, and a little homework revealed that it came from a subsidary of the bank that took my home.
    I’d love to hear the banking attorney explain why that bank is a victim.

  65. 72 Anthony
    September 11, 2009 at 18:49

    @ Banks as victims

    If my buddy wanted to borrow my truck, and I knew he would speed, would run red lights, and had prior Drunk Driving charges, guess what, if I give him those keys and he crashes, it’s my fault too!

    -Anthony, LA, CA

  66. 73 Zain from Salt Lake
    September 11, 2009 at 18:49

    @ Lisa

    Personal responsibility is not enough to fend off predatory lending.

    Ordinary people were not participants in securitization of toxic mortgage-backed assets. They did not provide credit ratings to these mortgage-backed securities and they certainly did not induce AIG to play w/ credit default swaps.

    Personal responsibility is nothing but a very simplistic and implausible excuse.

    • 74 Lisa from Pennsylvania, US
      September 11, 2009 at 19:15

      Zain,

      I’m saying you shouldn’t trust your bank and treat it as your friend. As someone above said, banks are business partners. I watch these shows on HGTV where people put NO money down and receive adjustable rate mortgages and I know they were most likely the first group of people to start complaining when rates went up. Just because a bank tells you you can afford a certain mortgage rate doesn’t mean you should accept that rate at face value. Take responsibility and look at your monthly expenses, THEN sign the mortgage!

      In America we’ve held the belief for far too long that everyone “deserves” a house, that it’s a basic human right. The only people who should be given the financial responsibility of a home and the loan that goes along with it is someone who can afford to make the payments, plain and simple. Otherwise you should rent (or some other alternative to holding such a hefty loan) like the rest of us!

  67. 75 Jonathan (dazzling San Francisco)
    September 11, 2009 at 19:00

    I just want to say how nice it is to have a conversation in the media on 9/11 that’s not about, you know, 9/11.

    Jonathan
    San Francisco

  68. 77 Tom D Ford
    September 11, 2009 at 19:01

    Well, that certainly was an interesting show.

    I’m still giggling over that comment about the bankers being the victims! That has to be put on YouTube.

  69. 78 Jonathan (dazzling San Francisco)
    September 11, 2009 at 19:06

    @Zain

    Ordinary people DID lie on their loan documents, claiming much higher incomes than they actually earned, and did borrow more than they could afford. That’s what made the assets “toxic” in the first place.

    However, placing and apportioning blame is an intuitively appealing but ultimately unproductive endeavor.

  70. 79 Robert in Indiana
    September 11, 2009 at 19:09

    About the adjustable rate loan (AKA- lendering). That was allowed when people were rarely dismissed from work in droves for long term unemployment. Nobody outside of the financial industry foresaw rates rapidly -repeat- rapidly getting so high while business got bad.

    I must point out that in the same bill that plugs our present debacle the cause of The Great Depression has been opened up again.

  71. September 11, 2009 at 19:14

    Hi WHYS, I guess the sages would say, “There’s enough for everyone need but not enough for everyone greed”. The financial institution have become so greed, they are not ready to help. In Ghana, the banks, I do not believe have anything in their constitution that talks of assisting their clients in anyway. All they do is, as the profession is, “BANK THE CLIENTS’ MONEY”. May be because the credit crunch did not really impact on the Ghanaian banks. so there is nothing like the banks offering any help, as if to tell their customers, “YOU HAVEN’T REALLY HAD ANY PROBLEM? The Ghanaian banks just rip their clients off. They offer no incentives to their customers. Shame on them!!!!

  72. 81 John LaGrua/New York
    September 11, 2009 at 20:18

    On a personal basis ,only if you want them to have control..Live within your means ,save for purchases and avoid credit which encourages needless impulse spending.Abuse of credit cards may well be the next crisis.,multiple cards are a trap for fools.” The fault dear Brutus lies not in our stars but in ourselves.” Hard lessons are being taught but only the bright and attentive will get the message.Regretably ,credit needs to be rationed by controls on banks and credit card companies to protect the public from themselves.since the concept of delayed gratification is not likely to revived..Debit cards make more sense.to prevent excesses.

  73. 82 KC
    September 11, 2009 at 21:05

    Better the bank controlling our lives rather than an incompetent government that can’t secure the personal details of its citizens.

  74. 83 Bert - USA
    September 11, 2009 at 23:16

    I’m fully in agreement withg those who say “look in the mirror.” That’s where greed first comes to play.

    Mortgages are about betting on the future. You buy way more house than you can afford, betting that in the future you can pay all the money back, along with interest. One common rationale is that *if* your mortgage payment is no higher than the rent you’re paying now, then it’s sort of okay. Of course, if you lose your job, suddenly you’re leaving this bank with an expensive house it can’t use. Your greed got you in that big house. Should have stayed in the efficiency apartment.

    Car loans are especially bad. Our vanity and our greed. And for a product whose value drops the minute you drive it off the lot.

    Also, sub-prime loans were possible because “the govt” guarantees the bad risk. Why? To please greedy politicians, who seek votes by making home ownership available to those who shouldn’t own homes. Greed again.

    Not saying the banks are saintly by any means. Just saying everyone quit looking for scapegoats. Banks are no greedier than the greed that makes us overly dependent on them.

  75. 84 scmehta
    September 12, 2009 at 07:43

    It’ll take a hell of a lot of time for the banks to convince that they are meant to serve the interests of the general public/common people. So far, until the economic downturn occurred, the banks have willfully allowed themselves to be misused by the corrupt and the powerful/influential elements of the societies. As of now, they are being looked upon by the commoners as a necessary evil.

  76. 85 Selah Sellasie
    September 12, 2009 at 14:47

    We in Jamaca seem to have discovered the holy grail of banking and development,what with banks continuing to report record and super profits while their clients especially small buisnesses and savers are dying from high interest rates which are ponzi like.There has been a fall out in every aspect of the productive sector for a number of reasons ,unemployment at all time high yet the banks and financial engineers in Jamaica has never had it so good.This test case should be a model for the Aftershock series and used as a model for the rest of the world.TO THE WORLD

  77. 86 Kindi Jallow
    September 12, 2009 at 19:29

    Banks in Africa are a threat to growth and expansion because their lending rates are so high and the steep panelty for defaulters of their terms and conditions making it impossible for medium and small scale enterprices to survive interest rates at the rate of 25% or 30%. Micro credit and micro finance have both failed in Africa abysmally.
    Some people brand these banks as the Gates of Hell, instead of being an arm of public good they act on the contrary. In The Gambia it is common to see petty traders every where selling the same items or identical items with no hope of expansion or eccessing bank lones but just to make bread for the day.
    Banks should have reasonable interest rates so as to enable medium and small scale be able to borrow and pay at reasonable interest rates for economic viability.

  78. September 13, 2009 at 07:00

    Great post.. this is really a great information..This will be useful post.. I will comeback for more..

    Loan Advice

  79. 88 Selah Sellasie
    September 14, 2009 at 15:26

    The banking system that evolved over time and particularly after Bretton Woods was never designed to facilitate development particularly in lesser developed countries.The system presided over by multilateral lending agencies was and still is designed to pluder the majority by a few ruthless families by there usery practices.This flawed system has become systemic and needs to be examined in a very honest way,until this is done there can be no form of meaninful development in Third World Countries and they will continue to suffer from worstening terms of trade while persuing the illusion and mirage called development.

  80. 89 Selah Sellasie
    September 15, 2009 at 20:04

    The headlines of a Daily Newspaper from Jamaica makes for very interesting reading,the former hread of a local bank who made billions in profits for that institution seems to be getting hell from his former international bosses.How ruthless and low are these banks prepared to go in executing there agendas.

  81. September 18, 2009 at 17:34

    Car loans are especially bad. Our vanity and our greed. And for a product whose value drops the minute you drive it off the lot.

  82. December 10, 2009 at 22:16

    thanks for the info about loans


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