DEpends are they children?
Why don’t you just come out and say you are suckling off the teat of banks and loving every moment because yours is the most financially brilliant system ever to exist and anyones system that mimics it is perfect by default.
It would make more sense. I get it your a lackey for the finance industry 'nuff said.
I think it relates in a the way that I described in a PM to you.
There was no socialism then. But I think that Imp’s point is about powerful governments, whatever form they may take.
By the way, I agree with your overall point. We have some undesirable banking practises of our own in the US, some not dissimilar to those that you describe. Some have been addressed, some are being addressed and some are not being addressed.
Another convert for the Lord.
Yeah fundamentally this is bigger than anyone this is how we let people handle our money and that is huge. Do we leave all responsibility in the hands of the banks and not watch them or do we take action to stop them being so stupid again?
I could almost see your hand up IMPs bottom then and your lips moved when he spoke. 
A bank is a place that will lend you money if you can prove that you don’t need it.
Bob Hope (1903 - 2003)
Drive-in banks were established so most of the cars today could see their real owners.
E. Joseph Cossman
A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.
Mark Twain (1835 - 1910)
I don’t have a bank account, because I don’t know my mother’s maiden name.
Paula Poundstone
If only we could still do that, but even if you are on the dole you now must have a bank account or soon you’ll be living on the streets. One question: can I get a job in a recession caused by banks? No then why are you singling me out as the bad guy? And are you just taking the monumental piss?
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Thomas Jefferson (1743 - 1826), (Attributed)
Wise words indeed!
There’s also one I remembered attributed to Abe Lincoln IIRC
“Given the choice of the banks behind me and the South in front of me I’d chose to have the banks in front of me”
The implication being they are the real enemy.
Are they ever! We have never been so enslaved by the mediocrity machine that is human nature and greed.
And one last quote:
"learn to think for your selves, and you must… You must! Though shalt always kill! 
"
Scrubious pip.
Amen preaching to the choir
In the US, the problem is similar, but different.
A few years ago, banks were “encouraged” by the government to open branches in minority (read: “poor”) neighborhoods. The problem is that banks don;t make much money in those neighborhoods. Checking accounts are loss-leaders for banks - especially “free” checking accounts. But this is the business model that most banks use - free checking accounts.
In more affluent neighborhoods, checking account customers tend to become certificate of deposit customers. Or car loan customers. Or mortgage customers. The kinds of things banks make money on. But banks don’t want to lend someone two thousand dollars for a car. Those cars make lousy collateral, and a two thousand dollar loan doesn’t make much money, anyway. And when these banks write mortgages that the less wealthy can afford (at least at first), the banks are accused of predatory lending.
So banks rely on fees. Studies have been done that show that poor people - people who live paycheck to paycheck at best, incur overdraft fees at a very much higher rate than more affluent people do. Studies need hardly be done - anyone could guess this.
Of course, banks can’t have one type of account, with one set of fees, in one neighborhood and not in another. These overdraft charges are a convenience for those who bounce a very occasional check (usually, they save the customer the bounced check fees on the other end of the transaction). But if that customer can’t cover the deficit, things can get ugly fast.
So, who is to blame? The government for leaning on banks to acquire customers they can’t make any money on, or the banks for trying to make money?
Another thing about that is that is the bank who is assuming the risk when giving a car loan to someone, and not the actual consumer of the car. For instance, if someone made two car payments and then stopped paying and got the car repossessed, then the bank would basically have to get whatever they could out of the car. This is because that the average new car loses about 40% of its value when driven off of the lot and a used car is generally worth a grand and a half or two grand less than what is paid for it. Of course, that amount declines with how old the car is, but as Faust said, the banks don’t really make money off of those loans anyway.
One interesting thing I have noticed from when I was younger is that the bank was much happier to give me a $2,000 unsecured personal loan for a junker car than to give me a $2,000 loan actually secured by the car. That’s mainly because had I failed to pay, the bank would have had an easier time of it to just come after me in the form of wage garnishment or something like that.
I think it is also important to note that the banks are really not taking advantage of these people in such a situation. They are merely recouping a little on the losses incurred by the business they were, “Encouraged,” to do with these people.
If either of those two, I’d say the Government. Really I would say, neither, though. Probably the individual people for not understanding personal finance.
I think they should be allowed a different business model. Car insurance companies, for instance, use different writing companies in different states. Because the regulatory conditions differ, and so do the markets, to some extent.
Banks that are required to do business in areas that aren’t profitable under their usual model should be allowed a different model. They are often competing not with other banks, but with pawn shops and so-called “paycheck loan” companies. Or worse. What would work better is checking accounts that charge regular fees. This would be seen as redlining, but for the reasons I mention, it would make these accounts profitable.
I couldn’t agree more on allowing a bank to model its’ business for individual branches any way that it wants to. The legal problem I think you are going to have is that with auto insurance, they basically have the different companies underwriting these things in different states, but the terms generally differ only by the individual states.
With a bank, what we are basically suggesting should be allowed to happen (Because it should) is that you could take a city like Columbus, Ohio. Now, the customers at the downtown Columbus branch might have to pay these checking account fees, or fees to cash Government checks and the like, but someone in the affluent suburb of Dublin, Ohio would not have to worry about such fees.
They could do that, or they could charge check cashing fees to people that don’t have accounts and get money that way. Actually, I’m not entirely sure why banks don’t do that to begin with, if you want to know the truth. The majority of banks will refuse to cash a check of any kind, at any price, unless the person cashing has an account there, or that bank has the account the check is from.
I understand why banks don’t do the payday advance loans, though. For one thing, it is way too much of a gamble and for another thing a proper bank could not be seen engaging in the same collection practices as a payday advance place.
I’ll tell you what they should do (in my opinion) related to checking and savings accounts, accomplish the same means and not have the Regulators down their throats. All they have to do is establish standard policies where certain checking accounts and savings accounts are offered based on credit score. That way, if someone falls into a certain category when they open the account, they have to pay a fee to have that account. When their credit score improves, then there will be no more fee. This works for the banks because they get money, and it also works for the individuals because the bank will educate them on ways to improve their credit score and personal finance matters.
That’s not a bad idea. In some states at least, auto and homeowner’s insurance uses credit score as an underwriting criterion.
And it boils down to underwriting. Banks can underwrite loans and credit card accounts, but they can’t underwrite checking account customers. I agree - they should be able to.
They absolutely should be able to. The only argument against banks being able to do such a thing is people claiming that the banks are not really taking a gamble by giving someone a checking account. We can see with people bouncing their checks, though, that the banks actually are taking a gamble. If someone goes $20 over on a check and the bank charges a $49 fee, you’re looking at $69.
If the person doesn’t pay that back, it is not worth it to contract a collection agency or anything to try to get that money, you might break even on the deal if you did that. So, basically all the bank will do is send the person a letter every now and then.
Even if the bank has it set up to where there are additional fines the longer it sits there, it will still be forever before it is worth it for the bank to contact a collector or attempt to do any sort of wage garnishment. The best bet for the bank in this case would probably be some kind income tax refund offset, but the bank has to show years of non-payment before the IRS will even touch that. In addition to years of non-payment, the bank also has to show an effort to collect payment.
Ultimately what you have with a Free Checking Account is some amount of risk, but no possibility of direct reward. The only possible indirect reward is a checking customer choosing to do other business with the bank when the time comes.
It is a shame though that banks may not use credit score or history as a basis to underwrite such an account. As of right now, the only extent a bank can use a credit score as it relates to a checking account is that they can outright refuse to give you one if your credit score is too low. Some banks do that, but not many, only the absolute most conservative of them.
I don’t know very much about homeowner’s insurance, but I do know that many auto insurance companies will refuse to insure someone with a poor credit score at all, and those with a poor credit score are often forced to pay higher rates. The worst term for those with a poor credit score has to be the fact that many insurer’s will not allow them to break a six-month premium into monthly installments; they want the entire amount up front.
That’s pretty tough because having a poor credit score is pretty indicative of not being able to come up with six months’ worth of auto insurance premiums all at once.
Of course, there are some insurers that don’t do that at all because they figure by insuring people with poor credit scores they can overcome the losses (Not that they really lose anything substantial if they stop the coverage immediately upon non-payment) by sheer volume. They basically say, at most x% of people are going to fail to pay their car insurance premium for a month, we will cut them off after thirty days but having the amount of customers that we do will cover those losses and then some. Those are basically the two ways to go about it, high-risk, high-volume (Which often works, in general, but we see it did not work so well for Citi or BoA in the banking sector) or low-risk, low-volume. Of course, the thing that will get the low-risk, low-volume places in trouble sometimes is that if you have a few more accounts that fail to pay than expected, the effects can be devastating because you do not have anything to make it up.
That’s why during the opening months of the recession the banks catering to the semi-wealthy or wealthy took a spill as well. As these high income jobs started dropping off, these guys were having to foreclose on homes in the high hundreds of thousands to the low millions. Those aren’t especially easy to have a foreclosure sale on and recoup your losses in a tough economy!
Well, the bank is taking a gamble when they open an office in some neighborhoods. A branch won’t be profitable on demand deposits alone. It needs to make loans, and to charge fees to small businesses. If the loans just aren’t there, and the small businesses just aren’t there, the bank is just not going to make money. The restaurant I work in has already, in a year and some months, taken out at least one loan with a local bank and has a line of credit with that same bank. We run several hundred thousand dollars in cash through that bank annually. They make some money off us. There are some poor people around, yes. But not that many. Most of them don’t do any business with the banks.
The reason insurance companies underwrite against poor credit is not that they think they won’t get paid - it’s because they fear fraudulent claims, and because those with poor credit scores statistically don’t maintain their property well, which increases claims.
Everything there is very true. Basically when they open a bank in such a neighborhood everything they do is going to be a gamble because of who they are doing it with. I remember a bank branch in Kansas City and I knew one of the guys that worked in it, it was downtown. I asked him once how they were even staying alive, because I understood some of the business people would transact business there, but it was mostly all poor people. Anyway, he explained to me that the bank owned the building the bank was located in and would rent out suites to lawyers and things of that nature, he said if nor for that, they wouldn’t even break even as a branch.
That’s another reason and definitely a better reason that the one that I mentioned, but getting paid still comes into play to an extent. You could have an insurance company with no claims whatsoever, but if they aren’t getting paid by the majority of the customers, then they aren’t making money.
Where they really make their money, of course, is investments and stocks and stuff like that. That’s where the majority of the money that comes in from the premiums goes, of course, they also handle things like IRA’s and stuff for their clients. The investments are necessary because your claims won’t necessarily end up outweighing your premiums, but they very easily could. This is especially true if you are a very good insurance company.
For instance, my insurance company (State Farm) which I consider to be the best anywhere is quite liberal about what they will do for you. I had my car parked on the other end of the road from where I used to live because there where no parking spots around my house that particular day. Anyway, some bastard stole my gas cap, siphoned almost all of my gas (I had just filled the tank) and slashed my tire just for the Hell of it. I got up and was on my way to work, I didn’t notice anything wrong with the tire (for whatever reason) but I did notice it when I ran out of gas after a few miles.
State Farm paid for a guy to come out and put a gallon in the tank, paid for the car to be towed to the nearest tire place, paid for 80% of the tire (It wasn’t a new tire that was slashed, so the based the reimbursement on the tread depth of my other three tires) and they essentially took my word for how much gas was in there and cut me a check for the 80% of the tire, the tow/gallon of gas as well as ten gallons of gas. The amount that all of this bullshit came to easily outweighs the premium I pay in a month.
Then April of last year I hit a bastard deer. Not only did my rates not go up, but they paid for nearly $2,000 in body work as well as 85% of the cost of the rental car that I had to drive around for two weeks. The amount of all of that bullshit was nearly three years of my monthly premium, and they didn’t touch my rates at all because they considered it an act of God!
Wow. Maybe I should ditch that fucking lizard and get State Farm.
I understand you got a car on top of a wall once…
I’m just kidding, that was a long time ago. I think that State Farm looks at your driving history for the last three years and if they see anything they don’t like, they won’t insure you at all. Fundamental auto insurance practice, straight old school, but it must work for them.
When I say anything they don’t like, I’m talking more than one speeding ticket, a fender-bender where you are at fault, anything at all.
If you have a solid driving record for the last three years, though, I say go for it. You’ll pay a higher premium than the lizard charges, but it will be worth it.
By the way, one of their multi-line discounts should offset the premium difference. I have a life insurance policy through State Farm which qualifies me for their multi-line discount. Anyway, the amount of monthly premiums I pay for both of these things combined is about $7 less than I would pay just for the auto insurance.
That is pretty damned funny! Do you honest to God believe that stuff to be free? NOTHING is for free. Someone is always paying for it. Who do you think pays for bank accounts, huh? Do the bankers pay for them out of the kindness of their hearts. You can just see that their hearts are OVERFLOWING with compassion for you. And let me tell you, ALL banks are irresponsible for their money. You REALLY need to read the creature from Jeckyl Island by G Edward Griffin. It explains exactly how the banking system works. It is setup so that the banks can be entirely careless all the time and not have to worry about it. The FDIC is just a guaranteed government bailout. Bailout is the name of the game. Banks don’t have losses. They just pass losses to the taxpayers.
When you overdraft your account and the bank pays the extra, whose money do you think they are paying that with? Not their own. There are two ways to look at this. One way is that all money belongs to the banks since they print it through the federal reserve. The other way is that the banks have no money of their own. They have assets and liabilities. Liabilities are the money that YOU deposit into the bank. The banks can loan out ten times what their holdings and liabilities are. When that money is loaned out, it is called assets. But banks do not have any of their own money. Instead they have YOUR money. That’s what they pay their expenses with. That is why when everyone takes their money out of the bank, the bank becomes insolvent. How can you run a bank with no money? So in short, the bank isn’t covering shit for you. They are using yours and other people’s money to cover your overdrafts. But that is the least of the problems with the banking system. When you take out a loan from the bank, the bank does not just make profit from collecting interest. It earns both the interest AND principle. The money they are loaning you is created from debt. In other words, it does not exist until they loan it to you. They only hold 1/10 of what they loan out. When they make loans new money is created. 9/10 of the money out there is created in this way. This banking system, known as the fractional reserve system is the largest and longest running scam in the history of the world. The banks entirely control the money supply, and as long as you are using their commercial notes and services they can take whatever money they want from you whenever they feel like it without you even knowing. But if you go over whatever they think you should be allowed to have at the time you get heavily penalized by them. You get penalized, they get rewarded. That is how it always works. Giving your money to the banks is no better then giving it to a thieves den. The thieves have stolen all of the money and replaced it all with counterfeits that used to make people slave away for the banks for their entire lives producing all while the banks consumes, consumes, and consumes and produces not one damned thing. Banks are incredibly fat blood sucking parasites, nothing more. And without your blood/money they would shrivel up and die. There is no such thing as a good bank at all in this time of history in the united states…
Banks are like the NHS only they are a blackhole fund, whatever you put in you never get anything appreciable back. Business runs on being mutually beneficial, if it provides no service then it is taking up space, a place holder for the next business. And the next business is going to funk it up just like the last one did if they don’t learn to take responsibility for their mistakes and stop claiming they are doing Gods work then the whole system is headed for an endless boom and bust with the working classes the middle classes and the literati as the casualties of war.
I do really not care if all banks in the UK go belly up and we all have to bundle our cash up stick it under a mattress and then guard it with dogs and guns.
That would suit me, because then I can shoot the libertarians that want my cash and cut out the banking middle men.
That was very dramatic, dreamy. It is entirely possible to live without using a bank. Perhaps those who do not like banks should try this.
Does anyone ever listen?
You can’t in the UK, literally becomes impossible after a while, unless you are born in a mansion and live on the Isle of wight or the queen you have to have one. They have you not just by the balls but by the short and curlies too. You can’t buy on line, do anything not face to face without a bank account. You can’t get your cheques at work unless you have an account in most places, and even if they do give you a cheque you are charged for cashing it. If you don’t work you have to have a bank account to get income support. It’s just not possible to be bank free any more without being a hermit.
You can’t buy online? How are you to survive?
Maybe it’s different there. I have a bank account, but I have never bough anything online. I seem to have plenty of stuff.
That doesn’t mean it can’t be done. Nothing is free.
Anyway, I can’t comment on the UK. I’ll have to take your word for it.
Life seems exceedingly arduous over there. I hope this is the biggest problem Brits face.
I HAVE tried it Faust. I go back and forth all the time between living in poverty and choosing to use the banking system. It is YOU who should try living without a bank, then you can let me know how that goes. I run a business, and either I have to get every single person to barter or pay in cash, or I have to use the banks. The latter is a hell of a lot easier then the former. There are some jobs that you just cannot even get unless you have a bank account. I have interviewed with employers who have told me they only do direct deposit. I am willing to wager in the future that will be the only way you can get paid. It will be all direct deposit and microchip implants in a cashless society run by the banks. Ever read the revelations?