Monday, July 03, 2006

The Money Trap

An interesting BBC television documentary last night on banks and credit cards: Panorama July 2nd, 2006 (video available). Reported three detailed case studies of people who were permitted (possibly encouraged) to run up impossible debts - two of whom committed suicide. Also provided some inside insight into banking policies that encourage further lending to people in trouble.

The programme featured a whistleblower who accuses the banks of putting profits before what she calls a "duty of care" for the customer, describing their lending practices as "irresponsible".

Clearly many people still have the idea that banks are (or should be) infused with noble ideals of duty and responsibility, and they express disappointment and outrage when the banking industry appears to fall short of these ideals.

Bank executives may well argue that their primary duty and responsibility is to the financially responsible majority of their customers. There is a utilitarian argument (greatest good, greatest number) that the survival of the bank is more important than the survival of one customer. But of course this notion of duty happily coincides with good profits for shareholders and high remuneration for the executives themselves.

So what is the purpose of a bank again?

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