Many years ago I had a bank manager as a next door neighbour. He was a lovely man, a bit like Captain Mainwaring in Dad’s Army, who cared about people but without the pomposity. After he retired we began to see the closure of bank branches and the centralisation of banking services.
When I asked his view on these changes he said that we were now witnessing the end of banking in the true sense of the word, as banks began to place greater emphasis on money lending.
The difference he told me was that in his day when a customer came for a loan he would ask three questions: Could they provide collateral, could they afford the repayments and was it necessary?
This last question differentiated ‘banking’ from ‘money lending’ because the bank were concerned a customer might take on the very real responsibilities of debt for something impulsive and frivolous. This could then cause them to reduce their ability to meet the everyday demands of running a home, bringing up a family and, of course, repaying the loan. Managers were trained in the traps debt could lure human fallibility into and sought to protect their customers from their own weaknesses as part of sound business principle and practice.
Sadly they were often loathed and feared because of this but their actions came from a moral perspective based on religious values that dominated Society until the cultural revolution of the 1960’s. Since then our religious institutions have seen the power of their moral values over society diminish, only to be replaced at a similar pace by financial values that are both narrower and more shallow in guiding our actions.
As the reasons for the financial collapse of 2007/8 have emerged it is clear that good banking practice was not the cause but rather irresponsible money lending. Not only were loans actively pushed at people who could obviously not afford them, whilst offering opportunities for high interest rates by trading on human fallibility. Knowing these loans could not be responsibly serviced, they were then ‘packaged’ up with good loans and sold to other banks as AAA rated investments.
I am not seeking to judge but rather highlight a mind-set, no longer driven by religious moral values that had been a tried and tested code when my neighbour ran his bank branch. Because of this we now have a global financial system made toxic by bad debt, which not even the people who caused it have any idea of how bad it is, after pumping $16 trillion into it. Six years on and still the banks are ‘fragile’ and unable to support business and Society the way they used to. Indeed, this mind-set is now telling us that, through their actions, unemployment and debt could become the ‘new normal’!
Human misery of this magnitude can only be achieved without compassion, I would suggest and mirrors that which caused the nuclear disaster at Fukushima, or the oil spill in the Gulf of Mexico. Here again, we have no idea of the true extent of the disaster through our irresponsibility but we do know it is spreading. These growing crisis are the result of traditional moral standards being replaced by narrow goals that are now beginning to rule our lives, particularly in the West and something Osama Bin Laden did and others seek to continue fighting vehemently against in the only way they know how.
In this new global world, where the power of corporations can be greater than that of governments, profit is the worst possible yardstick by which to live our lives and manage this planet and its resources. As a species we desperately need to find a new moral ground from which to operate. Traditional religious institutions may have shot themselves in the foot by abusing their powers in the past but we have to find a way of either resurrecting them or replacing them. Another financial collapse is looming on the horizon now, as banks continue their ‘unbanking’ practices with no responsibility or concern for the hardship they are causing.
It may be their undoing at the end of the day, only time will tell. It could also be the catalyst for the people to demand and seek a new moral code . . . but seek and find one we must!
P.S. Just launched a weekly newsletter . . . details here.
Thinking from his book: Global Magna Carta. Returning Power to the People . . . If They Want It! By J T Coombes