As regular visitors to this blog will know, I am a very strong supporter of the re-establishment of the Birmingham Municipal Bank as a safe and trustworthy haven for the savings, small and large, of the people of the city and nearby areas.
The fundamental values of the Municipal Bank would exclude needless chopping and changing of frivolous financial ‘products’, slippery small print and the many other devices of the trickster. In such a bank, the simple principle of constancy would prevail. And in my view people throughout the country should be pressing their Local Authorities to introduce or re-introduce Municipal Banks for their areas too. There is opportunity amidst the present crisis - Tesco for one have plans to exploit it and make further inroads into consumer services. There is a clear gap in the ‘market’ for plain, honest, straightforward savings banks. The chance will not last forever.
The Chairman of the devastated Royal Bank of Scotland recently commented (of China’s immensely favourable financial position) "Sometimes there’s a value in being unsophisticated." There most certainly is, and western bankers should now know this better than anyone. But I suspect that they will find reform difficult and their old habits very hard to drop altogether. Incidentally, an old meaning of the word ‘sophisticated’ is ‘corrupt’ - which I think serves to underline the point.
Constancy and confidence were the values on which much of the true wealth of this country, much of it, alas, now cast to the winds, was built and which other institutions, such as the Municipal Banks and National Savings, sought to complement and support. Is it too much to suppose that these fundamental principles might be worth rediscovering and implementing today? They have not been lost by the majority of our population, but can be very hard to identify in the financial sector.
When the Birmingham Municipal Bank was first established in the early part of the last century, it faced significant opposition from the commercial banks. The tactic today from the various quarters (some council officers, the local press and some banks) opposed to the idea, seems to be to frighten the horses by waving around large numbers, which are claimed to represent costs, for which I for one have not seen hard evidence in support. They suggest or imply that commercial banks can provide any required service. The very same banks that, as one respectable developer told me recently had pulled out of financing eleven out of twelve viable projects. The developer was therefore having to look to foreign sources to progress developments that would create many jobs. And these are the very same banks that have taken the King’s shilling - or rather billions - are effectively owned by the public, but who are refusing to do their bit for the economy and the country that has sustained them.
They are not to be trusted, and despite the questionable opposition, I hope that enough of the City Council will be constant in finding a way forward for proposals that will once more offer ‘Security with Interest’ (the motto of the old Municipal Bank) and attract the trust of the citizens of Birmingham. Such a service is widely desired amongst ordinary, respectable, people. Perhaps if a courageous lead is given by Birmingham, there could be Local Authority led banks throughout the country. Having such ‘exemplars’ might force a change in the behaviour of commercial banks for the many years needed to bring in a new generation of ‘unsophisticated’ bankers who will not need enforcement to conduct their business in the public interest.
The fundamental values of the Municipal Bank would exclude needless chopping and changing of frivolous financial ‘products’, slippery small print and the many other devices of the trickster. In such a bank, the simple principle of constancy would prevail. And in my view people throughout the country should be pressing their Local Authorities to introduce or re-introduce Municipal Banks for their areas too. There is opportunity amidst the present crisis - Tesco for one have plans to exploit it and make further inroads into consumer services. There is a clear gap in the ‘market’ for plain, honest, straightforward savings banks. The chance will not last forever.The Chairman of the devastated Royal Bank of Scotland recently commented (of China’s immensely favourable financial position) "Sometimes there’s a value in being unsophisticated." There most certainly is, and western bankers should now know this better than anyone. But I suspect that they will find reform difficult and their old habits very hard to drop altogether. Incidentally, an old meaning of the word ‘sophisticated’ is ‘corrupt’ - which I think serves to underline the point.
Constancy and confidence were the values on which much of the true wealth of this country, much of it, alas, now cast to the winds, was built and which other institutions, such as the Municipal Banks and National Savings, sought to complement and support. Is it too much to suppose that these fundamental principles might be worth rediscovering and implementing today? They have not been lost by the majority of our population, but can be very hard to identify in the financial sector.
When the Birmingham Municipal Bank was first established in the early part of the last century, it faced significant opposition from the commercial banks. The tactic today from the various quarters (some council officers, the local press and some banks) opposed to the idea, seems to be to frighten the horses by waving around large numbers, which are claimed to represent costs, for which I for one have not seen hard evidence in support. They suggest or imply that commercial banks can provide any required service. The very same banks that, as one respectable developer told me recently had pulled out of financing eleven out of twelve viable projects. The developer was therefore having to look to foreign sources to progress developments that would create many jobs. And these are the very same banks that have taken the King’s shilling - or rather billions - are effectively owned by the public, but who are refusing to do their bit for the economy and the country that has sustained them.
They are not to be trusted, and despite the questionable opposition, I hope that enough of the City Council will be constant in finding a way forward for proposals that will once more offer ‘Security with Interest’ (the motto of the old Municipal Bank) and attract the trust of the citizens of Birmingham. Such a service is widely desired amongst ordinary, respectable, people. Perhaps if a courageous lead is given by Birmingham, there could be Local Authority led banks throughout the country. Having such ‘exemplars’ might force a change in the behaviour of commercial banks for the many years needed to bring in a new generation of ‘unsophisticated’ bankers who will not need enforcement to conduct their business in the public interest.
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