Can we take a lesson from the Banking System in Great Britain?
Posted on September 12th, 2009 by admin
Banking
De-regulation was the theme of the day for awhile in GB-the banks went crazy-became corrupt and out of control-and they were nationalized. The moral of the story-some regulation is necessary. All the lender cares about is his commission- push the loan-who cares if it doesn’t get paid back (the actual loan will be sold to someone else down the road)the lenders job is to convince someone they can afford the loan and get that signature. If the loan stayed with the original bank they would be much more conservative in their lending pratices.
De-regulation was the theme of the day for awhile in GB-the banks went crazy-became corrupt and out of control-and they were nationalized. The moral of the story-some regulation is necessary. All the lender cares about is his commission- push the loan-who cares if it doesn’t get paid back (the actual loan will be sold to someone else down the road)the lenders job is to convince someone they can afford the loan and get that signature. If the loan stayed with the original bank they would be much more conservative in their lending pratices.
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we can take a lesson from them yes you can lead a horse to water
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How about some personal responsibility to say I can’t afford to take this loan? Novel concept I know but we make the choices in our lives, the banks don’t hold a gun to our heads and make us take a loan from them.
Bankers have been running this country down to the ground since 1913. In some areas, they are necessary, but they get too involved in running this country.
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Very good point. But regulation is a two way street. There is such a thing as “predatory borrowers.” You know, people who LIE on their applications.
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Overregulation of the financial institutions won’t help the economy any.
I’d rather the government practiced a very light handed approach to banking and finance.
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I think you’re a bit misinformed. Northern rock was nationalised when it collapsed- the rest of the banks are still run by private companies, although they still answer to the bank of England, but only in the same way the US banks are answerable to the federal reserve. Nationalising northern rock was pretty contraversial even here, and we have a history of nationalised services – unlike the US.
It was nationalised to stop the many people who have savings accounts losing all their money, and all the people with mortgages (it is quite a popular mortgage company) having their homes repossesed – essentially it’s a stay of execution. I don’t believe any government really would let a bank collapse with all the consequences of it in this day and age – and any government that did so would be absolutely heartless to those who essentially have had no say in whether the bank lent responsibly or not. Whilst nationalising northern rock is risky (the taxpayer could potentially lose all the money invested in northern rock if it still can’t make money) it’s going to minimise the impact on individuals by placing the burden on the country as a whole; I don’t see anything like that going down well in the US.
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Yes, de-regulation can cause major problems. It is what caused the power outages in California a decade ago. For similar reasons too.
You could say that people taking out loans need to be cautious, but overzealous banks that will be paid one way or another, even if they have to sell off the remaining debt, can ruin a country when they have an outstanding number of uncollected debts that will likely not be collected. It’s “virtual money”, it doesn’t exist, but when push comes to shove it has to be resolved.