A bank you could count on

Since they got their snouts severely bitten by something nasty in the sub-prime trough commercial banks have been finding ways to pass on the punishment for their greedy and imprudent conduct to ordinary people. So many of the nefarious things that they do are ‘industry wide’ moves. They act as an informal cartel. There is, admittedly, cut throat competition - to see who can get the most money from people like you and me. This avaricious and profit-bloated ‘industry’ competes only to the extent of how long standing customers can be cheated of fair rates of interest on their savings, hit with outrageous charges and provided with low quality services. The ‘services’ include: opening hours that suit themselves, lunchtime queues in deliberately understaffed branches, the absence of receipts when making deposits, compulsory use of call centres. No doubt dear reader you could add to this from your own rich, or not now so rich, experience. There is a desperate need for a real alternative operating on near-forgotten principles of service with fairness and responsibility. The great city in which I live once offered such a service in the form of the Birmingham Municipal Bank.

Many citizens lament its loss (and still cherish their ageing passbooks). This is why I have frequently proposed its re-establishment. Following my suggestion, the Council re-acquired the old headquarters building on Broad Street a few years ago. I had something else in mind at the time, but it would have made a great place for a new start for a new Municipal Bank. There are, or were some fine rooms inside as well as the main banking hall. The vaults and strong room and safe deposit boxes were still there when I got shown round three years ago.

The idea would be to offer fair and consistent rates for saving, to encouraging thrift (even explaining what this is to some younger people today) and discouraging the profligacy and living-beyond-means encouraged by the financial industry that is so rampant in today’s society. The mottoes inside reflect virtues of not so long ago that would be worth re-adopting today. For example: "Saving is the Mother of Riches" and "Thrift radiates Happiness". I admit the language is heavily Victorian but the underlying message would be news today - you get wealthy by saving (in a trustworthy institution) and you don’t have to be miserable while you’re doing it!
Alas, the City Council re-sold the building (at a profit) so it’s no longer available. But there are plenty of alternatives, especially as the Council is going to drastically reduce the number of buildings that it occupies. Furthermore, a Birmingham Municipal Bank could keep both money and jobs in the city and be the means through which the oft-suggested ‘Brummie Bonds’ could be issued to allow ordinary folk to support civic projects (the Town Hall restoration would have been a good example) while offering a secure return.

There are flies in this healing ointment. Government legislation in 2000 made the establishment of civic banks more difficult (Municipal Banks still exist in name in a few other local authorities but they offer only very limited services to their own staff). The Government has an exclusive focus on access to credit and such like ‘financial services’. The Treasury was supposed to be considering a ‘Universal Bank’ but this, whatever it meant, seems to have sunk without trace. What I am on about here is saving and fair, and comprehensible rates of interest rather than shifty packages (where loyalty is penalised with craftily cut rates and spurious ‘tracking’). This would all be complementary to existing Credit Unions which perform valuable if small scale services. And while it is true that the commercial banks could attempt to stifle such an initiative with anti-competitive practices, I’m sure that these could be overcome and they would be far better to start mending their ways.

Indeed Birmingham could lead the way again - just as it did in the early days of commercial banking. We are often told that the City should distinguish itself. What better way than by knocking aside the obstacles and putting people first with the re-establishment of our own Municipal Bank?