How would you change the banking system?

Get rid of the £50000 limit

The only way to reform the banks is to eliminate the Fractional Reserve banking system and only allow banks to lend as much as they have on deposit, just like Building Societies. The ability of banks to lend far more than they had on deposit is the root cause of the whole global credit crisis.

Why don't they just admit they want to kill the current banks off completely?
Without continuous access to savers money the banks and the city wouldn't be able to run their current reckless schemes that apparently make the UK such a wonderful place for financiers to run their barely disguised ponzi schemes.
Ring fencing savers money means they would have to invest their own - they're not that stupid.
I'd like to see a sort of Post Office type account that I could use on the internet or POS. No over-draught - I can only spend the money I have, the minimum charge required to cover transaction costs (1p or 0.1% whichever is the greatest). That should make a pretty penny for whomever runs it and allow the small part of SME's to thrive. Adams would love it - modern capitalists would hate it.

If you make banks smaller, surely the risk of them failing increases? Additionally if you make banks completely risk free surely the returns that you get on savings must diminish. I appreciate some people just want a save haven for their money, but having we already got that as the Government already guarantees the first £50k. However some people may be prepared to take a slightly greater risk to get a higher return on at least some of their investments, and if they wish to do this they should be allowed to.

Fair interest rates as at the moment we would all be as well keping our cash under the matress.

Stop all the big bonuses and golden handshakes.

Ensure the banks STOP playing with our money and when it all goes pearshaped the bods at the top get sacked and are fined for mismanagement.

The taxpayer is in future safeguarded from having to bail out failed banks and other financial institutuions.

Get rid of the pen pushers and paper shufflers.

Make them responsible in law, shop workers,tradesmen,drivers are all supposed to work under the sword of Damacles, fines,criminal records or even imprisonment for mistakes at work, how many people will be ripped off, lied to, treated badley before something is done ?

I don't want my money invested in unethical choices, I would like to see a green , eco / ethical choice. I have no wish to support the arms race, GM, Nuclear etc.

The idea of a risk-free bank system is stupid. Banks have investors and valued employees. Customers need dependable service. Banks must never be fragmented or allowed unlimited speculation on money. Strict structure reduces volatility and improves solvency.

saving should be risk free anyway, that said no one will ever convince me that gordon brown did not know what the banks in britain were up to,but as long as the taxes from the banks kept rolling in to pay for his loony tune scemes he looked the other way, after all it was gordon who took away the oversight of the bank of england, as with most other things under labour they have their fingers in the pie until it goes wrong then it becomes a race to stick the blame on some one else

How would i change the Banking system?

Let the Americans take control.
In the US, if you break the rules, you go to jail.
In the UK, you get a Knighthood.

Instant transaction by card or e-transfer - most of Europe do it.

Proper managers in branches - no more "Computer says naaahh....", actually get to know customers and make descisions based on people.

Bank charges to be invoiced, not just deducted.

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Gael Bage wrote:

I don't want my money invested in unethical choices, I would like to see a green , eco / ethical choice. I have no wish to support the arms race, GM, Nuclear etc.

The Co-Operative Bank, amongst others, have been doing that for years.

An end to Casino Royale.Banks should be safe depositories for savers and prudent lenders to employ funds for non-speculateve business, home morgages ,consumer finance.Booring but sensible .Security trading ,NO.A return to a modified Glass Steigal in the US and s similiar risk limiting form world wide.The West is staggering under a mountain of debt which can never repaid caused by politically inspired irresponsible lending by fools to the profligate .The prudent pay for this fiasco by absurdly low interest rates on savings and ever increasing socialization of uncollectible loans.Criminal charges rather than golden parachutes for the Bankers who imperil the financial system !

If I deposit money in a bank, it remains my money - they are just taking care of it for me. Unlike investing in shares, which is at my own risk, there should be no risk involved and the bank should not be unable to return my money to me... surely if they cannot, that is theft and prosecutions should follow?

I agree with those that say a bank should not be able to lend out more money than it actually has, and believe that the bank's own 'playing the market' ought not to be done with savings deposits, but with their own funds and any money invested with them specifically for tapping in to their so-called expertise in the money markets.

"safe haven" accounts should be guaranteed by the banks, with Government ensuring, through regulation, that they are save havens.

This whole scam about reforming the banks is complete fantasy.

For a start, how can one bankrupt little set of islands to the west of the North Sea dictate what happens in banks that are multinationals based abroad? Is it a bit like an extradition treaty? Is it like the one we have with the US which works one way only (we have to send them anyone they want and they don't let us get hold of their criminals)?

Secondly many of our wonderful MPs are in the pockets (and probably on the payrolls) of these banks anyway.

Maybe the headline makes Dave Snooty and his pals look tough and sells Murdoch's "newspapers".

'Risk free' presumably means 'interest free' as well. What little interest we get on the money in our accounts is to compensate for the banks temporarily taking it away and putting it to use in some risky investment.

No risk = no return = no interest for us. Might as well stick it under the mattress.

Hive off the market trading (ie gambling) activities into separate companies. Then if these activities cause yet another crisis (as they will eventually, memories are short)mainstream banking need not be dragged down with them.
As others have stated, introduce limits on trading linked to capital reserves, not what can be borrowed short term on the markets.

100% of peoples savings should be protected, not just the first £50K.

There should be a robin hood tax to save the enviornment, fight poverty and end the disgrace of greed amongst the mega rich. This would have several benefitial effects. Firstly it would promote Green policies and secondly by eliminating poverty birth rates would fall hence lowering the demand on earth resources.

The net effects could yield us hundreds of billions a year and prevent damaging cuts to jobs and services. The Nation would grow quicker as demand increases. The obscenely rich would merely be Rich and the poorest would have some spending power to boost local economies. By assisting the enviornment we could reduce dependance on fossil fuels and develop new sources of energy and save endangered species.


The Murdoch press and the Tory media would of course rush to defend the policies of greed and claim that the robin hood tax would end freedom and democracy! They want maximum greed, maximum profit and dont care if the Earth burns as a consequence. How they sleep at night or those who contribute to thier lies is yet further evidence of the moral and spiritaul decay of this Nation.

How we reverse this fatal mindset so many middle class people have is one of the biggest challenges facing this nation. This greed culture and our over materialistic way of life MUST be stopped if future generations are to have a chance. Banks must be reformed but they should also have less influence on things generally. Banks and Bankers are under the dellusion they know everything on all topics and our political parties to thier shame echo this false dellusion.

Not possible to make anything "risk-free". Savers should not assume ANY savings are entirely risk free. Taxpayers can't guarantee that inflation will not devalue anyone's savings. All taxpayers should provide is limited guarantee of the original deposit up to £20k per person.

For a start, they need to be made pay for the recession they caused. As it stands, they are getting off scot-free, whilst those of us who are not part of the banking system will be made to pay through higher taxes, vat etc.
Bonuses should be payable only on achieving targets, which must be made harder to achieve.

There is no doubt that banks have become too big for their boots.They have been able to cock a snoot at governments throughoutthe world because of their high status in producing wealth.Its the kind of people who work for the banks which should change.We as a nation need profitable banks without the highrollers who have no morals and regretfully there are quite a few of them. They need to have barriers placed upon them beyond which they dare not go.Seperate the domestic,commercial and investment sectors and introduce new players by changing the rules.If the new players were allowed to take most of the domestic business the large global banks who view domestic customers with comtempt could get on with what they do best on investment banking.When the rules changed on banks and building societies years ago it was in my opinion a big mistake.The balance needs to be addressed.There needs to be a more flexible approach on borrowing and saving which at present is holding back recovery.With global banks not keen on lending because they are rebuilding profits it needs new thinking with the new players.

I'd just wish that the Government, Banks, Supermarkets, and the oil industry all admit they simply make far too much money to actually benefit those on the gorund - ie the general public.

If they could at least make this admission then we would see improvements all round.

The current setup simply benefits the rich while the poor get poorers through obscene charges and rates.

1. Introduce a new bank, totally owned and operated by the Government on a non-profit basis, with loans available to those who CAN afford them at a reasonable interest rate, and small loans interest free to those who are genuinely struggling through no fault of their own. That might persuade the fat cats at the big corporate banks to get their act together or risk losing all their customers.

2. Regulate the private banks even more tightly. No more disproportionately high fees for things like accidentally going into the red, making out bankers' drafts etc.

The banking industry is one of the industries that I trust the least. They have shown their true colours with big bonuses etc, and I believe that if they can't be trusted to act responsibly we should tighten the noose around them to make them dance to OUR tune for a change.

Lage corporations, banks and government all seem to work against the common person to get money in the past few years. This seems to work out better in the UK viewing it from America, but your health system is differen't. The new bank rules favor "slight of hand" banking and alot of fee's. So many people are not able to keep up with these banking ploys and are in deep trouble in America.

Break banking into TWO,

1) where customers savings money is invested in 'reasonable longterm securities'
2) where the fools money is invested in 'casino type bets'

and as an after thought why not stop all payments for bonuses for everyone to be tied up for at least five years ~ until it can be truly ascertained that the bonus was really a flash or fraud or genuine.

and as an after after thought "what does the RICH Banker gain by trading the whole world ~ but loosing his very heart & soul & integrity with the common people" ~ just as Dickens wrote "money will be the very chains that weigh them down in the afterlife" !

The only ONE THING worse than the Banks regulating themselves is Government/EU interference.

Heavier taxes on the banks will result in higher charges for customers.

Saving banks as they did a couple of years ago means that the Banks think that they are bullet proof.

I say let them fall on their swords if they fail - sure it might cause a few problems but at the very least it would stop any more stupidity!

One regulation that does need better inforcement is one that does better credit checks on potential borrowers and not letting lending rise above set multiples of income. After all the run away house pricing WAS fueled by the increasing multiple loans handed out by the banks.

Dob't get me started on 100% or worse still 100+% loans!

How dare these people orchestrate our system/society in order to legally walk away with all the wealth!? What an utter disgrace the so called ruling elite have proven to be ... and as for cutting armed forces, yes you can start by taking the lot that are in the desert and bring them straight home and offer free Univ places to any who want them!
Outrageous UK!

The higher intrest you get from a bank the biger he risk to your savings it regulates itself,People only banked with iclands higher intrest, So why should those who stayed UK bail them out.

Back in the 1960's I worked for Barclays Bank - a mere book keeper because I was a female member of staff and deemed unable to work at a higher level.

I can well remember my branch manager preparing his half yearly bank charges. With pen and red ink at hand he would leaf through ledgers containing details of every account and he, and he alone, would decide if that person merited a charge. He knew his customers, he knew why and how they had become overdrawn and could take this into account. Of course, the pages relating to his friends and golfing buddies were never sullied with his red ink.

Basic banking yes but infinitely more sensitive than the computer driven letters demanding money with menaces. Yes, I would like to see smaller, retail banks divorced from high risk banking. Your normal saver needs protection so if the government is willing to do this I reckon it will be a winner.

I really detest the fact that my own bank uses my savings and yet gives me such a mean rate of interest. I have long advocated the idea that if all savers withdrew all their money on a given day the banks and the government would have to sit up and take notice. Of course current accounts would have to be exempt.

setting up safe haven bank accounts is a very good idea and will put the savers minds at rest, after the last debacle of some of the banks in Britain, will banks have to keep money to one side instead of gambling savers money on the stock exchange, or if some bank is made insolvent, will the government have to us the taxpayers money again to bail the bank out of trouble

Banks have no credibility as far as the ordinary citizen is concerned. If it were not for the Government guarantees, banks would have failed to even repay investors capital. The current scandal is that banks have mainpulated the most vulnerable investors by paying virtually no interest on investments unless the customer is alert enough to switch. Great for the alert invester buy so many people, particularly the elderly have been effectively cheated. So refirm them yes, but regulate them to morally sustainable standards too.

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19. At 6:50pm on 13 Jun 2010, The Padre wrote:
100% of peoples savings should be protected, not just the first £50K.
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Yep totally agree
AND stop ripping off the savers to subsidise all the those with debts.
They're taking away all my interest and giving it to those with tracker mortgauges,( Hundreds of pounds a month ) and to bolster the banks capital.
Its just theft by the Govt to support all the debtors and build up bank reserves.
At the very least they should be handing out I.O.U's and thankyou/apology notes to all those with savings.
Successive Govts have sold off everything to pay debts. Nearly always Labours, who have now done irreparable damage and should be no longer be allowed to run as a political party, with the history they have at busting the country every time they're in.
The only assets now left in the country are peoples savings & property The property's way over valued so they're going after the savings.

Risk free; 100% Guarantee exists it’s called NS&I.

In order to decide how you want to reform the banking system, you need a clear decision on what kind of society we want for the next 75 years.

Because if you embrace a capitalist market system, then the type of economy you create is intrinsically linked to the type of banking system.

In Britain, broadly banks are competing with their customers. In the traditional post-war German system, banks are far more in partnership with their customers. Particularly their business customers.

When I was growing up, building societies, life insurance companies and banks were usually separate. Now there is far greater consolidation.

In our country major high street banks were big payers of coupons, often to pension funds. So banks were the friends of pensioners and the enemies of the workers. In general terms.

In this country, taking your credit history with you if you change banks requires the bank to agree. It could be legally required. That would open up banking hugely but create a generation of 'rate tarts'. You might need to think carefully how to manage that sensibly......

Ultimately, the question for politicians is to try and gauge what they would like the economy to look like broadly, in terms of trading companies, manufacturing companies and support companies (lawyers, accountants etc); what balance between limited companies and quasi-public sector/non-profit-making enterprises should exist; what balance in terms of frequency and size of different companies; and what kinds of finance, broadly, they might need.

That's an extraordinarily general painting which in no way means 'picking winners'. It's a philosophical point from which state decisions/regulations ensue. Because you might well find that requiring banks to put somewhere between 20 and 50% (I don't know the right figure) of their business support in equity, not loans (should business desire it) might change the nature of the British economy radically. It might not be possible either........but banks will know what percentage of regular income from loan repayments they need to pay their employees and liabilities as well as allow depositors to withdraw suitable sums on demand....

You might create rules which require a percentage of loans/equity from local depositors to be for local businesses (e.g. within 50 - 100 miles) as a way of ensuring capital remains in regions. It's not anathema to anyone who wants functional communities. It's anathema to those who think destroying communities worldwide is acceptable collateral damage in pursuing riches at all costs. I make no judgement, I point out the realities of decisions politicians can make.......which must take into consideration what other nations are doing currently.......

It's certainly reasonable to limit pure betting to the banks' own surpluses without specific customer authorisation. And it's certainly reasonable to ensure that any state bail-outs always make a profit from banking failures.......

I would try and rebalance slightly in the direction of more mutuals as building societies and stimulate creation of new SME banks in which pension funds are allowed to take stakes. And I'd like statutory requirements for customers of 10+ years standing to be able to take their full credit history to a new bank if they wish to change for good reason (like being treated like scum after 25 years of model customer actions...)

Money will run out. Emotion goes on forever.

Bring back old style mortgage criteria, 3* one verified income, and stop lending for second homes. Bring in an annual land/property tax and rent controls and allow the property market to fall 50%, where it would be not for bank bail outs.

The property speculators should not be underwritten by all taxpayers and are complicit in the banking crisis. As are our MPs with their property portfolios funded by taxpyers and property television programmes who have encouraged and profitted from greed and stupidity of the buy to let speculators.

Here’s one of the biggest banking cons.
Transfer money and it’s immediately deducted from your account and you cease earning any interest.
However, it may takes days for the transfer to the recipient account to take place, and in the meantime the bank earns interest on YOUR money on the overnight deposit market.
Successive governments have allowed it to continue.

A simple return to the rules worked out in the 1930's would be a good start. It was thanks to the stupidity of the profit greedy Tories in the 1980's that the tried and tested rules for Banking , worked out after the last great Banking crash, were thrown aside.
Suddenly the idea of a Mutual Building Society was thrown aside by the short-termism of the Conservatives, the Stability of ALL of the Banking system was destroyed on the altar of short term profit.
We need a return to the separation of Investment Banking from the Savings system , both have a place, but with customer choice.

1. Central government should fund local government in order to facilitate the setting up of many more credit unions. This is an extremely successful arm of banking for the small man (or woman) across Canada and elsewhere.

2. Retail Banking should be just that and completely separate from speculative investment banking.

3. All banks, retail or investment, should have an FSA officer (paid by and provided with staff as necessary by the state) appointed to the board with the authority to oversee all activities within the organisation to ensure compliance with all constraints placed upon the banks activities by central government, to try and prevent any high risk activity and to protect the consumer interest.

Risk free safe haven accounts "guaranteed by the government" is only conservative speak for "bailed out by the taxpayer when necessary".

Simple really, select 6 high rollers from the city at random and punish them severly.

This is one of these ludicrous politicians' wafflings that cost time and money but will lead to almost nothing. Nice sounding words that might appease the public if still angry but practically implementing the waffle may will prove difficult.

It will lead to a few unintended consequences and I'm surprised that Vince Cable hasn't spotted them.

Take "risk free" accounts. The only way savings with a bank can be risk-free is if they're interest-free as well. The reason: your savings account bears interest because the bank lends your money to others who need it and can afford it. Therein lies the risk: the bank, hence you, might not get repaid. So to avoid that risk you'll just be depositing your money for safe keeping. It will presumably still appear on the books as a liability but excluded from the asset book as the money hasn't actually been lent. The irony is that the bank might charge for the safe keeping!

Then...splitting the investment from retail operations. Fine as long as you have nothing to invest or save by way of investment. All investment carries some risk but the astute investor can earn more than the current 1% or 2% through the investment arm of the bank via the retail front. But it's going to get complex and expensive if the transactions go 'across banks' (as it were). Small investors might find themselves paying more management fees and be required to invest a higher minimum. Not to mention delays in getting your money back if you need it.

How would I reform the banks? I'd do nothing with their organisation except demand they hold a certain level of capital pegged to the sort of risks they take.

But I'd introduce tighter regulation particularly on derivatives. Until the B of E or FSA (or whoever's in charge this week) fully understand and can calculate the risk attached to each instrument, given the economy as it is at any time, the product should not be traded. I'd be very very cautious about CDOs and CDSs (and their further derivatives), the main casino products that get people really nervy....understandably.

28. At 7:40pm on 13 Jun 2010, Clive Hamilton wrote:
The only ONE THING worse than the Banks regulating themselves is Government/EU interference.

Heavier taxes on the banks will result in higher charges for customers.

Saving banks as they did a couple of years ago means that the Banks think that they are bullet proof.

I agree that taxes on the banks will simply be passed on to the clients, large and small.

But why tax all the banks? This is one aspect of Vince Cable I truly can't understand. Several banks have got through this crisis perfectly well without taxpayer bailouts: why penalise an organisation for being successful?

Shouldn't we also tax car manufacturers effectively bailed out by the scrappage scheme? Or any other organisation that's got through these times without resting on the taxpayer?

Most of the recent crises have been caused by governments spending recklessly and inflating credit bubbles, not the banks.

Banks should be liable in full for losses.
AND SO SHOULD BANKERS.
NO point in massive bonuses on the day the ink dried, but nothing to do with me Guv after that.

Another of the big risks in breaking up the banks is that in a free market the victims might just move their operations and capital elsewhere leaving some kind of parochial counter and deposit-taking retail operation in the UK. Taxing the banks might then yield a lot less than at present and your money will be no less safe. Far better to insist on decent capital adequacy.

Any multinational organisation will site itself where it can take best advantage of the perks (low taxes, less regulation) in the interest of shareholders. And that won't be London, let's face it. If you were a business person with a multinational operation, would you stay here with all this government interference?

"Simple really, select 6 high rollers from the city at random and punish them severly."

Sometimes I see suggestions on HYS that confirm the disastrous failure of Labours educational system...
What you're suggesting is no different to just picking half a dozen random people off the streets and sticking them in prison because someone stole the lead off the church roof ten years ago.

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46. At 9:06pm on 13 Jun 2010, jim wrote:
Banks should be liable in full for losses.
AND SO SHOULD BANKERS.
NO point in massive bonuses on the day the ink dried, but nothing to do with me Guv after that.
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Yer who do they think they are.... politicians !

How would you change the banking system?
This seems relatively simple, though (perhaps) fairly difficult to implement.
1. Separate commercial banking from investment banking. In other words if I put my money in a commercial bank the commercial bank can only do normal banking activities for me e.g. deposits, transfers, pay bills...
2. If I put my money with an investment bank, I expect that bank to invest my money, but they should need a signed statement from me that establishes my accepted level of risk (above which the investment bank cannot go on my behalf).
3. In no case should investment banks be allowed to trade derivative bundles unless the bundles are broken down and explained and then traded through a seperate, transparent exchange where everyone knows what is going on.
4. In no case should investment banks be allowed to make negative bets against economic performance whether this be a sovereign country, a company, or an individual.
5. Commercial banks are never too big to fail. In fact commercial banks should be community-based, small enough to know its clientel well, though branches may roll into a head office.
6. Investment banks are never too big to fail. They invest - openly, transparently. Their customers are in the know, and everyone takes their chances, and lack of success can lead to bankruptcy.

Most people who steal other peoples money for their own benefit are convicted as criminals. How do bankers get away with it ?

I would like to know why I got £500 interest on my savings in 2008 and now get £20. A banker is now pocketing £480 of my money for their yacht. Legal my arse.

13 Years ago my Brother went bankrupt, he was with the Abbey and he had just started a new business, they refused to given him any kind of overdraft on his personal account and because of direct debits he was constantly going about £5 to £10 overdrawn, after a year his penalty charges had forced him into debt of £1,500.
Really it was a kind of Loan Shark practice and he went to the wall, things just got worse with the Banks from then on.
Yes they need reforming alright, they need breaking up and pulling down, then we can get some proper retail banking back in this country where the banks offer a service and don't see every customer as a cash cow.

New Government should stop this “Bank Robbery”. They got money with 0.5% and give us for mortgage with ~5%. They are doing nothing to earn 4.5% from our pockets.
They take my saving money and pay me like a The Bank of England 0.5%.
Stop Bank Robbery us.

It needs to be taken back to the standards it use to be before overseas-ism was brought into it and all was thought about was bonus for this, that and the other...instead of real customer banking...
Bring back the days when the Bank Manager knew the customer...knew the businessman...knew the company director...was as honest as the day is long...

All financial organisations should either be co-operatives or mutuals of some other sort run buy the representatives of the users for their benefit, or in some cases by our government. That way we get to set pay (and no bonuses) and direct them only to lend or speculate if it serves the general good and ensure that we are no longer "managed" by "our" leaders so as to profit "The Financial Sector".

What Capitalism has created is speculation, recklessness, greed, arrogance and over-indulgence. This is why every boom is followed by a bust and will continue to do so.

Those responsible for the speculative bubble at 2007 could not conceive that one day it would burst. That was where their arrogance kicked in. Their activities were making massive profits for banks, a good chunk of which were being paid out in seven-figure bonuses that kept property markets humming. Even when cracks started to appear they blamed everyone but themselves.

51. At 9:36pm on 13 Jun 2010, Heavy Mud wrote:
Most people who steal other peoples money for their own benefit are convicted as criminals. How do bankers get away with it ?

Absolutely no one is obliged to use the services of a bank. A few mutuals and the post office are there if you don't like the multinational banks. Once more it is politicians in their waffly wisdom that insist on everyone having a bank account. Stupid.

But when talking of stealing people's money, what about the greed-driven electronic gadget corporates, selling pads and phones that cost a few pounds to manufacture for hundreds of pounds? When a pouch to keep the things in costs upwards of £15 to you but less than 50p to make. Or sportsware, selling t-shirts for £30-£50 that were made for about 10p in Haiti.

= = = = = = = =

I would like to know why I got £500 interest on my savings in 2008 and now get £20. A banker is now pocketing £480 of my money for their yacht. Legal my arse.

That has nothing to do with the policies of high street banks, far more with the government deficit and NuLab's policy of "don't mend the roof while the sun shines, just hope it holds out during the storms."

It was national governments that inflated the bubbles with vast and reckless credit expansion policies: the same government whose regulators did nothing about banks lending to house buyers at 125% loan-to-value when the housing bubble was in plain sight.

All this led to an economic collapse and the Bank of England's nonsensical policy of dropping its base rate to 0.5% in the hope of keeping the lending bubbles going.

But don't worry. Inflation will soon push the base rate back up and you'll get a higher interest rate on your account. The bankers haven't pocketed a huge amount of your interest. They've been forced to lend at far lower rates if lending at all; and now, too late, the government has demanded (ironically at the same time) that banks keep a higher capital reserve. They can't keep the money and lend it at the same time.

We thought our banks were "Safe Havens" for our money we have all had a rude awakening.

I'll back any reform that gets the sticky fingers out of the till in the form of the greedy bonus culture.

Breaking up the banks is fine but there must be a structure in place though the Bank Of England to support major corporate takeovers and mergers. Significant industrial growth could be built through acquisition to block this avenue will further extend the recession. No one or (domino) group of banks should be able to bankrupt HM Treasury / Bank of England.

Its all very well, but included in it I think should be a corresponding interest payment payable to savers to that which banks charge to lend savers money.

If such accounts are no risk, then I presume that it would have a consequential negative effect on interest payable to savers.

The whole point of the huge growth in higher risk investments is that with higher risk, the returns are also generally higher, tho not guaranteed..

I think its right tho, banks should NOT be able to lose your money, but at the same time, it would balance with it being MUCH MUCH harder for people or UK businesses to get loans and those who are deemed higher risk or low incomes, will I think suffer the most from non-availability of accessible credit.

Thing with this, is that it STILL puts MOST of the responsibility for the banking catastrophy on banks, when in FACT the catastrophy kicked off because the big USA credit rating agencies ( the very ones who now demand Greece & the EU & UK etc pay back our debts) FRAUDULENTLY sold USA High risk Sub Primes as low risk investment packages. They are currently under investigation in USA, but I'd mUCH MUCH prefer if our government ALSO opened an investigation into this FRAUD which also RIPPED OFF UK banks.

I also think that you will find that tho savers money may get protected, the banks will still be able to gamble with borrowed finance themselves as they do now, unless consumer banking is totally seperated from gambling (investment banking).

Customer banking (cheque accounts, savings, mortgages etc) must be separate from trading operations. Thus if (or rather when) the greedy risk-takers screw up they can safely be allowed to crash and burn while the financial system as it affects the rest of us continues as usual.

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51. At 9:36pm on 13 Jun 2010, Heavy Mud wrote:

Most people who steal other peoples money for their own benefit are convicted as criminals. How do bankers get away with it ?

I would like to know why I got £500 interest on my savings in 2008 and now get £20. A banker is now pocketing £480 of my money for their yacht. Legal my arse.
"

This has nothing to do with "rich" bankers, it's to do with the ridiculously low interest rates as determined by the central banks and the money markets. Blame the Government(s) here.

53. At 9:49pm on 13 Jun 2010, Alex Lord wrote:
New Government should stop this “Bank Robbery”. They got money with 0.5% and give us for mortgage with ~5%. They are doing nothing to earn 4.5% from our pockets.

Unfortunately, mortgages are still fairly risky. How otherwise? In the current climate, people arrange mortgages over, what, 25 years when they can't even guarantee having a job for the next 3 months. A ridiculous state of affairs but that's where it's at. It isn't just money that lenders lose from defaults but the cost of rearranging loans, dealing with bods trying to rescue people from repossession etc. It all costs and occasionally the bank suffers losses that inevitable are borne by all customers. Just business, that.

One of the changes I'd force on any mortgage lender is that the mortgage cannot be more than 3.5 times the verified income of the mortgagor; and that 20 years is the maximum term. If nothing else, that would get house prices down to realistic levels.
= = = = = = =

They take my saving money and pay me like a The Bank of England 0.5%.
Stop Bank Robbery us.
Again, lending is risky at the moment so it is expensive. Banks do suffer defaults (which is why many are in a mess at the moment) and are naturally cautious. But you can push some of the blame on the Bank of England that could up its base rate a bit. After all, we're running fairly high inflation at the moment and some think the B of E's prediction that it will fall back later this year is misplaced. Some of us think the B of E should go on what IS there, not what SHOULD BE there. Plus, of course, its money-printing policy is inherently inflationary.

You can get better rates depending how long you can commit your money, how much you have or can save per month/year. You don't even have to save with a bank to get them.

This comment was removed because the moderators found it broke the house rules. Explain.

58. At 10:42pm on 13 Jun 2010, righteoussasquatch wrote:
We thought our banks were "Safe Havens" for our money we have all had a rude awakening.

I'll back any reform that gets the sticky fingers out of the till in the form of the greedy bonus culture.

I love this "greedy bonus culture" line because its a bit of a myth. Many companies used to reward all their employees with a Christmas bonus or April cash bonus. If you earned £30,000 pa and got a measley 1% bonus, that would be £300. (Many companies gave 5 or 10%)

If you've earned your employer £500,000,000 and got a bonus of £500,000 that's only a very measley 0.1%!
The equivalent in yer £30,000 pa job would be £30.

Unfortunately there is no safe haven for your money unless you keep it under your mattress or the floorboards (and it isn't too safe there either, these days). If you want your savings to be 100% safe you're relying on the guarantor of last resort - i.e. the taxpayer.

There is NO risk free savings account, there never will be - unless it is also interest free - because if your bank lends out your money (to earn you interest), the act of lending it incurs a risk, so your savings won't be risk free.

Don't let yourself be bluffed by these politicians and their misleading nonsense.

Bring back the sensible loan ratios so that loans are sensibly repayable in relation to salary. There used to a fairly set formula for obtaining a mortgage - something like 2.5 x salary + 1.5 for wife (on the basis that a pregnancy might be expected). I know this means hardly anyone could buy a house at current market rates. But how long do you set up loans that cannot be repaid?

Making banks smaller as proposed doesn't necessarily make them safer.

Having the Bank of England back in control is probably going to be the most sensible solution which is being put forward. The FSA I seem to remember thought that Hull was too far to travel to from London when the first rumblings of the problems at Northern Rock were heard, so they didn't go. How much blame should be laid at their door?

every business is subject to cover any financial losses that occur due to their mistakes, why not banking?

"64. At 11:15pm on 13 Jun 2010, doctor bob wrote:
'58. At 10:42pm on 13 Jun 2010, righteoussasquatch wrote:
We thought our banks were "Safe Havens" for our money we have all had a rude awakening.'


.......There is NO risk free savings account, there never will be - unless it is also interest free - because if your bank lends out your money (to earn you interest), the act of lending it incurs a risk, so your savings won't be risk free."


Can I add to Dr Bob's comment. Some building societies are now charging £10 for a building society cheque (not a cheque you write yourself out of a personal cheque book, one of their cheques they print out for you). So an interest-free/no-risk account, and most savings accounts virtually are interest-free at the moment, can become very expensive indeed if you begin to incur administration charges on an account which, by its nature, you can never overdraw. So the no-risk savings account is a pretty yucky option (if you have savings, anyway).

What would I change? Pretty much everything. After that there would be no more cheap credit, no threat of hyperinflation, no zero interest, no fractional reserve banking, no mortgages based on foreign credit. Savers would be rewarded, those who chose to live on credit would have to bear the full consequences. House prices would go back down where they belong. Bankers would be ordinary people, with ordinary incomes. Money and banks would serve the real economy to serve the people, not the other way round.

I agree that there should be no risk attached to depositing money in UK bank or building society savings accounts and therefore any amount should be underwritten by a guarantee that it will be paid back in full to the saver.

Savers are not the same as Investors.

64. At 11:15pm on 13 Jun 2010, doctor bob wrote:
If you've earned your employer £500,000,000 and got a bonus of £500,000 that's only a very measley 0.1%!
-------------------------------------------------------------------------
Oh you poor thing!.This is precisely the type of preposterous mindset that caused the crisis..."earned" or gambled? Executed with due diligence or with reckless abandon? The bonus culture prevents rational and responsible behaviour.
It is greedy, it's not a myth and it very nearly caused the demise of western economies.It has to stop.

All banking systems with secret accounts like the Swiss and Caymen Islands should be opened up to International inspection.
We have way to many Americans hiding their assets in these accounts while publiclly pushing liberal policies to tax the rest of us even more.
We could also identify the many dictators and terrorist organizations that use these secret accounts to hide their assets.

Safe Haven Accounts? All this does is ensure a race for the highest interest rate possible, encouraging risk, and making sure its tax payers that pick up the bill when it goes wrong. - Like last time, but with up front guarentees. Absolute Madness.

Getting rid of risk although gives people a false sense of security. Everything we do in life has an associated risk and people should understand that. The 50K limit seems reasonable at the moment. Covering greater amounts just is a subsidy to the richer people. Just as our demand for Oil drives companies like BP to drill at greater depths and risks; don't just blame the company, it is all of our fault because of our need for oil and the company and shareholders for not questioning the risks and abatements the company was taking. Shareholders cannot just sit back and take the profits they need to actively question as well.

On thing is for sure, I will bank with the first UK high street bank that promises (after the usual, nice, cosy welcome message in R.P English) NOT to put me through to someone in Malaysia, Indonesia or the Philippines when I call.
I am sick to death of global financial institutions and their "Press 1 for this enquiry, press 2 for that, press 3 for the other, press 4 for whatever..." approach to customer relations, enquiries and problems, or in my recent experience, caused by my banks in ability to roll out new but unsolicited ATM cards to replace my old one.
I would say to the High Street banks in the "If no one in the UK is worth speaking to by a member of your staff, then get out. Let someone else have a go at running banking here".

I do not want to discuss my personal finances with someone in a call centre, banking sweatshop or shed on the other side of the world. Frequently a person who's spoken English is totally inadequate for the job they are doing.


I don't choose a bank for the benefit of their shareholders or their Private bankers bonuses.

How about LESS of the bonuses for the banker boys and girls, less pay out for the shareholder and a bit more employment within the country they are claiming to serve. We do need it in the UK and the rest of Europe, in case this hasn't been noticed yet.

Does anyone know of a bank where you actually get to speak to someone at the branch you bank at, unless they have more than £100,000 on permanent deposit? If so, please post a comment!

Suggestions of taxing bonuses and limiting pay are immediately met by threats to relocate - given the appalling mess the bankers made of the economy following Gordon Browns deregulation - refusel to impose limits when all around him were urging restraint - I for one would not shed a tear if they upped sticks and took their incompetrance elsewhere so long as they dont involve our banks and our nation in another monumental financial screw-up. Once bitten twice very definetly VERY shy.

I agree with doctor bob. (comment 64)
I am frequently dismayed by the fact that poor bankers only get a half million pound bonus for playing roulette with other peoples money.
As Nurses, Doctors, Firemen, Teachers, ambulance drivers, members of the Armed Forces, University Professors and all the other unnecessary -free loaders in society don't seem to get bonuses in UK PLC I think it is only fair that a gamblers bonuses be guaranteed at at least that figure.
The public in general, having bailed out the entire banking system have little to complain about as their services are axed due to the oversight and incompetence of our heroes of the 1% bonus.

Whatever are these people complaining about? Remember, Bankers "If you can keep your head when all about are losing theirs and blaming it on you; you obviously haven't grasped the situation"

74. At 02:58am on 14 Jun 2010, Richard WInkworth wrote:
On thing is for sure, I will bank with the first UK high street bank that promises (after the usual, nice, cosy welcome message in R.P English) NOT to put me through to someone in Malaysia, Indonesia or the Philippines when I call.

... er First Direct mate been around about 15 years :)

There has to be a clear divide between risky/rewarding and safe/not as rewarding. I deal in shares, and understand the risks. However, I don't expect my bank saving to get lost, they pay about 0.3 percent interest (yet they loan out at 15%, clearly they are making a good profit on my money).

Franklin Roosevelt during the Great Depression in 1930s broke the large banks up into smaller banks in order to keep them from having too much power, and to keep them from becoming interstate (national) banks. The theory behind the idea was to make sure if one bank failed it would not be as devastating since the banks were kept in individual states in the United States, and could not cross state lines. The premise worked and banks were kept under control by staying relatively small. Now banks in the United States can cross into any state, international lines, and with this become as big as they like. The danger with this is the fact that if one enormous bank has sever problems it not only effects the state, but the whole country, and potential the global economy. Banks need to be regulated and the larger they are the harder it is to regulate them. We need to go back to the old concept of keeping banks from becoming so large that they become powerful buracracies with too many branches, and too many departments reaching too far to be truly watched by regulators.

Thanks for this Warg60! But it's owned by HSBC who have caused me the massive headache in the first place- I just don't want to support them anymore.

64. At 11:15pm on 13 Jun 2010, doctor bob wrote:
If you've earned your employer £500,000,000 and got a bonus of £500,000 that's only a very measley 0.1%!
How interesting. Over the last 40 years I have earned for my employers vast sums and still am doing though I have been retired nearly 20 years.What bonuses did I get? Not even a "Thank you".
Peter D A Met Fim C Eng South Carolina

More lip service by the Tories. Nothing will change. The rich people who benefit from the current banking system are the ones with the power to enact change but they have been benefitting from this system financially for years so why would they cut off their endless money supply ?

Is anyone else still waiting to see who is put in prison for causing the financial meltdown ? To date we have seen NOTHING done about it even though millions of people have lost their life savings and pensions. When is justice going to be done Mr Cameron ???

A building Society with £100 on deposit can lend £100
A Bank with £100 on deposit can lend £1200.

Anyone spot a possible problem?



By the way this perverted little non-arithmetical device is responsible for all of the banker's bonuses.
And all of our present woes.

The root cause of the banking crisis was the credit rating agencies. It was they that gave the "AAA" ratings to toxic bonds and it is they that are causing such harm to the financial status of so many countries at the moment. Yet instead of having been thrown in jail, these faceless people have been allowed to get away with wrecking the World economy without so much as a word of reprimand.
Their role should be taken over by government and the Word Bank and the banks subjected only to maintaining a safe liquidity rato. It's really strange how these credit rating agencies are being allowed to get away with it all.

Low risk banks have existed for generations - they are called building societies. Lenders for poor people also exist - called credit unions.

Banks on the other hand need to lose the PLC status where the interests of the shareholders come first. This invites reckless gambling. They need to have a limited company status and belong to the sort of people the customers trust.

No problem with banks making huge profits - all good for the tax man. However, many of the super clever ideas they have come up with of late are no use at all as they are based on gambling with borrowed money. Banks should have an absolute duty to be able to pay back their investors. Profits should be used for "business development".

There is a place for sub-prime mortgages, there is a place for lending to high-risk businesses and there is a place for fancy offices. All these activities should come out of profit and not out of deposits.

The banks failed because of poor risk identification by the ratings agencies. That in itself should be a focus for reform.

High street services and investment banking should be completely split up.
Larger banks should be broken up into smaller ones.
All banks should be made to pay into a central, government run insurance fund.
The government should get a say on who gets what salaries/bonuses, making sure that only the right performances get rewarded.
Investments laying against a company being successful should be outlawed.
The Robin Hood Tax should be enforced immediately.

Toycollector wrote: "How would i change the Banking system? Let the Americans take control."

You are kidding, aren't you? The American's may have started off by refusing to fall for the Fractional Reserve, debt based banking, system that the whole world follows, but by this point they're hip deep in it and grabbing money with both hands.

You do remember how this current financial snafu started, don't you? With people abusing the concept of loan trading. American banks were leading the charge on that debacle.

66. At 11:28pm on 13 Jun 2010, chadmulligan wrote:

every business is subject to cover any financial losses that occur due to their mistakes, why not banking?

== = = = =

Sadly not true - the defaulting business goes bankrupt - which means preferential creditors get their money back in full (such as banks etc) while the more general public get nothing or very little.

I've suffered from a company going bankrupt - the bank got 100% of their loans - The Mortgage company got 100% - I got 12% of the £20,000 I was owed or just £2400. This is the usual case.

Nobody is going to vigorously control the banks/casinos. Bankers are too powerful and politicians rely on them for employment when their expenses scams have been found out and they need to retire from public service.
The taxpayer will always carry the can when bankers' reckless, immoral & peverse gamblings go wrong. That's just part of life in 2010 Britain. I think the average guy in the street has learned to live with it and is indifferent to it. We see these peverse injustices so often!!

"The Banks should not be allowed to make any family homeless by stealing they house, only after 5 years min time from default of morgage payment. No foreclosing of loans on any small business due to bad trading for min 3 years i.e Government loan should bail them out, no forcing small businees into the wall by banks, {Short term view} this should be made illegal, massive fine on the banks' for this crime .Only loans for property only familys, {Not buy to let landlords} all propertys bought by them to let???? tax at 60%, they buy all the started homes; which stop many young familys buying a house this is unfair.

Allow them to lend whatever they hold on deposit, and nothing more.

Transfer me all the lovely mulla to me and I'll show you how to run a banking system! But do it soon please...

I would nationalise the banks.

May I point out that it was During the end of the 1970's into the 1980's Tory Prime Minister Margaret Thatcher and the City of London financial interests who backed her, introduced wholesale measures of privatization, state budget cuts, moves against labor and deregulation of the financial markets. She did so in parallel with similar moves in the USA initiated by advisers around President Ronald Reagan. The claim was that hard medicine was needed to curb inflation and that the bloated state bureaucracy was a central problem. It didn't work.

So the Thatcher Deregulation Model was initiated by the Tory doctrine not Labour.

The UK sub prime fiasco was also initiated by Tory Doctrine by the Tory policy of forcing the sell off of council owned housing to poor tenants - yet banning the same councils from building more houses with the money - to "save" the Tories from increasing the dreaded council tax - a serious vote loser for the Tories. This also led to the massive hike in house prices as demand outstripped supply.

The idea that tenants - who could not afford private rents should borrow large sums to buy these council houses led to a large numbers of defaulters - Exacerbated by the subsquent hike to 15% of mortgage rates - At least the Labour party lowered the interest rate so mortgage payers could still afford the pay the mortgage. But the prudent savers - like me suffered. My savings income has plummeted by 90%.

The Credit Crunch was due to the US sub prime frauds - where banks sold packets of sub-prime defaulting loans cheaply to investors- by lying.

I think we should go back to the 1933 Banking Act of splitting Banks into two types as well as capping the size of individual banks. It worked well for around 40 years until the UK Tory party and the US Government changed it.

It is not just the banking system that needs reforming it is the entire monetary system. A debt based monetary system is utterly dependent on exponentially increasing amounts of debt being incurred to service the outstanding debt+interest. there exists no way of redeeming current debt, this system has resulted in the entire population being encouraged to acquire ever greater levels of debt which in turn has led to huge levels of poverty and social decay. All this whilst banking profits have snowballed from about 10% of total corporate profits in the sixties to 43% today. What we are seeing right now is the commencement of a monetary collapse, Ludwig Von Mises referred to it as a "crack up boom" we will see the commencement of hyperinflation as faith in paper assets evaporates and States default on their obligations (frequently fraudulently created obligations courtesy of the mega investment banks)this will be followed by a deflationary collapse. No one wants to know the truth when it is as dire as it currently is so politicians and regulators continue to live in La-La Land with there fingers in their ears shouting loudly to eliminate any chance of them hearing what is becoming increasingly obvious to all but the most numb minded individuals. The outcome of this oncoming tragedy will be the banks being supported by the Government of the day to take the assets/houses/pensions/deposits/businesses of the ordinary man on the street. But guess what .... YOU ALL VOTED FOR IT..... for sixty years the British public has voted for any numpty politician that offers the greatest amount of socially provided freebies via taxation and deficit spending, this was simply not possible during the period prior to 1935 when Britain had an honest, fraud free, limited debt Gold Standard monetary system. The bankers and the politicians have over three generations operated a symbiotically beneficial Ponzi scheme which is now collapsing, but not so quick to cheer, the power accumulated during those years at the expense of the population will be ruthlessly employed against the same population as collapse becomes apparent to all, laws and regulations will be swiftly implemented to ensure the bankers and their trillions survive intact whilt the population become mere ants in the ant farm, toiling endlessly for little reward and taxed to oblivion , FOR GENERATIONS, to feed the rapacious demands of the banking fraternity. Enjoy your future , you demanded it you created it, you WILL pay the price for endless profligacy both personal and national. The only way you will survive what is coming down the pike is by holding gold and silver unknown to the government in a place that they cannot legislate it into their hands "for the benefit of the many" of course!

84. At 07:20am on 14 Jun 2010, paganpaul wrote:


85. At 07:45am on 14 Jun 2010, gingerchris90 wrote:


Both have good ideas, but paganpaul may be wrong about "No problem with banks making huge profits...". Safer banks will necessessarily be more boring profit-wise. Since many here seem to think the problematic behaviour of banks is due to recent innovation, please look back to remedies following the Great Depression.

The clearest lesson is from the history of the Glass-Steagall Act of the United States, also called the Banking Act of 1933. The Act had many provisions, but the most important were 1) regulation of building societies as 'no cheques', which prevented the money-market demand deposits that fuel speculations in debt and property 2) prohibition of stock market investment with deposits 3) creation of the Federal Deposit Insurance Corporation.

In 1980 item 1) above was repealed, but Reagan takes too much blame, as Democrats in majority in the House also voted for it. This allowed building societies (called savings & loan banks or thrifts) freedom to offer high-interest (and high risk) demand deposit accounts and to freely speculate in the debt/property market. Within 10 years, the thrift sector collapsed in a speculation bubble causing a huge bailout by the FDIC (hundreds of billions) and the US taxpayer. Brits may recall the effects on jobs and house prices here from 1988 to 1994, because the debt speculation and its eventual cost were exported around the world.

In 1999, item 2) above was repealed, and predictably the same thing happened again, only worse.

So, three times since 1929 the world financial system has been trashed because of bank speculation. Not only that, but laws to prevent the problem recognised 77 years ago were tried, worked, were repealed once at cost, then were fully repealed under pressure from the banks to "make huge profits".

We depend on the financial system for all payment. We can no longer barter and accomplish the massive things we build and do at such a fantastic rate. Banking must be more boring to protect this priceless element of the economy.

This comment was removed because the moderators found it broke the house rules. Explain.

"The Banks should not be allowed to make any family homeless by stealing they house, only after 5 years min time from default of morgage payment."

= = = = = =
Actually it is not "their house" it is the mortage company's or bank's - That is why they CAN foreclose. Most lenders give ample warning.

No family should borrow more than they can afford - But they don't - they borrow what they can get - often far more than they can afford.

A quick economics 101 for all those demanding that banks only lend what they have on deposit...... 95% of money in circulation is freshly created debt via fractionally leveraging your deposits. therefore if you deposit £1000.00 in Barclays Bank , they put it through their fraudulent banking accounting system and rename it THEIR asset, they then create out of fresh air anything up to £10,000 to lend to others. the others then deposit their "new money" into Lloyds or HSBC and the £10,000 becomes £100,000 so you get 1-2% or £10.00 to £20.00 interest on you £1000 deposit , the banks then lend out up to £100,000 and charge perhaps £10,000 interst on the entire newly created debt/money. so when you hear how many billions Barclays made in the last quarter now you know , they pay out £20.00 and get back £10,000, quite a profit margin!! and if the system were to be outlawed without an entirely new monetary system their would be ZERO money in circulation and an IMMEDIATE deflation of circa 95% in the paper value of everything, fancy buying a house for £3000.... sounds great , but try paying off your £200,000 mortgage with an income of £1000/annum..... a GOLD STANDARD IS THE ONLY SOLUTION SUPPORTED BY A REAL BILLS DOCTRINE A LA WWW.PROFESSORFEKETE.COM AND ADAM SMITH.

Bring back Building Societies and set up a People's bank that offers better rates of interest.

Should keep the rest of the banaking industry on its toes.

I don't care about big businesses or the like who can afford to have major accounts, but for those of us who have to have a bank account these days, no matter which one it is, not one abides by the direct debit code. The two we have had over the years both have let direct debits be paid out early,ie the creditor takes it early, or 'earmarked' over the weekend, especially if its a bank holiday (well clearly it is for them but not the rest of us!) which if I have money going in on monday for a direct debit on monday or tuesday they can actually cause real hardship by their actions. It is impossible to make banks and creditors account for their action.
I hate banks and I hate direct debits and if I was rich enough to pay a bill outright I would, but I am not and the current situation means that the so called direct debit guarantee is a waste of paper and is laughable as a peice of law because the banks and the creditors ignore it.