What a bunch of Bankers

Another rate cut from the Bank of England indicates the extent of the problems that the UK is suffering from at the moment. The lowest rate in 57 years could even be seen as a desperate attempt to inject life back into the economy to help bring it back from the brink.

Despite other measures introduced like raising the stamp duty threshold and the more recent reduction in VAT (both short sighted and ineffective measures that demonstrate once again how out of touch the current Government is with the 'man on the street') this could really help. Without exploring all the reason as to why, one of the most important things that needs to happen is boosting consumer confidence. As that happens and the population feels more comfortable spending their money the economy will start to right itself.

All good news really, except for one thing - the banks. They are not all guilty of this but to not pass on the interest rate cuts, in whole, to their customers gives an insight to the greed, endemic to the banking culture that contributed to the mess the world economy finds itself in. This the BBC ran a story 'Banks face pressure on rate cut' on Friday (05/12/2008) in which Shane O'Riordain, of HBOS defends this policy saying:

"I think it is worth remembering the government has said it expects our bank to be run on commercial lines, and that's exactly what we're doing.

"All we are simply doing is seeking to achieve a decent margin like any other business, nothing more and nothing less."

Well let's look at that.

Yes, the Government has said that it should be run along commercial lines but that doesn't mean making as much as possible from customers who are facing some of the toughest times they can remember. And, if truly following Government advice, HBOS have also been told to 'pass the cut on' but for some strange reason that bit of advice doesn't apply.

There's also nothing "simple" about it. Every business needs to make a "decent margin", that's a fair point. The trouble is a huge number are struggling to make any margin at all and are trying everything they can think of to attract custom to keep them solvent. The banks though, having made monumental mistakes driven by greed, seem to think that rather than shouldering their part of the blame and acting responsibly it's an opportunity to maximise profitability at the expense of their customers.

No one is arguing that the banks should not operate as businesses and turn a profit but no one likes to feel that they are being held over a barrel which is what is happening. Ultimately the blame lies with the banking institutions. It is wrong that in these changing times, short sighted leadership and greed is driving decisions that are solely focussed on rebuilding cash reserves rather than the future of this country.

The who's who of rate cuts