Article by By Ben Curtis of ‘Positive Money’ – campaigning website for banking reform
Interesting snippets of information have come to light in the previous few days.
Banks are charging the highest ever rates for overdrafts in this country, a facility many of us need due to the recent crisis. 19% is the standard in this day and age, which is approximately 38 times the base rate set by the Bank of England. Lloyds bank even charges its customers £5 merely for the privilege of having an overdraft – a measure sure to hit the poorest families hard.
But all of this is to help kick-start the economy, right? We need these tough measures to get us all saving again, right?
Well, unfortunately not. In addition to the fallacy that increased savings can even kick-start an economy to begin with (lower rates of borrowing = smaller money supply), these high interest rates aren’t even being passed on to savers! 0.19% is the average amount paid to somebody with a current account. After tax, somebody with £1000 in the bank will receive £1.50 a year, while the borrower of £1000 can expect to fork out an extra £190.
So where is the extra £188.50 going? Banks are cutting costs and jobs all across the country, as is the public sector, doing its unfortunately necessary part by cutting £6bn – this year alone. So if banks are cutting costs, cutting jobs, cutting rates paid to savers, and increasing rates taken from borrowers, they must be giving back all the money we used to bail them out with and paying us back for all the loss of jobs and wealth they caused, right? Well, no they aren’t….
Ah, they must be contributing to the Irish bailout, right? Of course not, we, the taxpayer, are providing 7 billion euros to the Irish government in support, to help our neighbouring island to get by.
Well, perhaps not. For Lloyds, 44% of their Irish assets of £26.7bn consists of perhaps irrecoverable loans. RBS also has significant exposure to Ireland through Ulster Bank, their assets total over £50bn. Yes, that’s the same Lloyds who are taking the highest ever recorded interest rates from borrowers with one hand, and giving out the lowest ever recorded rates to savers with the other.
So the banking industry are receiving another 7 billion euros in taxpayer support, in the guise of our contribution to the Irish bailout, paying savers next to nothing, and extorting record levels of interest. There’s a lot of profit in this somewhere, can anybody guess where it’s going?
Ah yes, the banking industry is expected to pay out roughly £7 billion in bonuses this year, while we make £6bn in public sector cuts. A great time to be a property developer in San Tropez, but perhaps not so much to be a Teacher, Nurse or a Fireman.
It’s high time the benefits from the creation of money started to go to those who need it.
P.S. Banks can spend millions on lobbying to protect their interests, against our interests. To compete with that, we all need to chip in and make a contribution to help the campaign grow. Please setup a monthly contribution and help make this campaign a success.