Saturday, 8 October 2011

The Function of Banks

Recently, on another website, I was in an argument with a certain ultra-right wing person about the functions of banks, and why the people occupying Wall Street were right to do so.

For the person I was talking to, things couldn't have been clearer. The banks were completely and absolutely in the right. They were right to foreclose on loans and put people on the streets.


"The business of banks is to make money...Duhhh" is what this person said.

Really? I thought the business of banks was to provide a series of services, including safekeeping of one's earnings and provision of finance at reasonable terms so one doesn't, you know, have to borrow from the local mafia boss or moneylender. For those with some knowledge of Shakespeare, do you remember what happened in The Merchant of Venice?

"The Jewish Moneylender" (Auguste Charpentier)

I think it's fairly obvious that commerce depends on financing. If everyone had to save up all the capital necessary to start a venture, precious little business would be done, either on the production or consuming end. I couldn't, for example, have started my dental clinic without a bank loan.

It's when the bank itself starts acting like a mafia boss or moneylender that problems start. That's why regulatory bodies exist, to keep them on the straight and narrow.

But what happens when the regulatory bodies, and the government which controls them, start acting like a mafia boss or moneylender?

I think the people occupying Wall Street, the people who have lost their jobs and homes and cars, who find themselves without a future, those people know the answer.

I'm not too sure about the defenders of the usurious banking system, though.


  1. I'm no defender of our system. At all.

    Nevertheless, even a defender of the system should be repulsed by what the banks did.

    The fact is, most folks only take out a couple big loans in their life. For a house - maybe two houses! - or, like you to start a business.

    Most of us, we're not loan experts.

    Banks and mortgage companies ARE loan experts. They can look at a credit report and KNOW with reasonable certainty whether a person is a good bet or not.

    I've seen these credit reports. People making practically nothing, in debt up to their ears, approved for HUGE loans.

    There was no WAY they were going to be able to pay. No, they should not have taken out the loan, but what kind of lender lens to them?

    The kind of lender who doesn't care whether the lendee pays back because said lender is going to bundle a thousand of these loans and foist them off on some 3rd party anyway.

    The people have a right to be pissed. We have been told for decades - centuries! - that even though the system screws us, we'll all be better off if we let the rich do what they want. But it turned out not even the rich did better that way...


    High horse. Sorry.

  2. I know exactly what you mean. No need to apologise.


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