A Bank for all Seasons

As we enter the season of bankers' bonuses isn't it heart-warming to see leading bankers settling for a modest million or so? How public spirited of them! And how characteristically useless of government to allow this when the state - our state - has such a huge stake following the bail-outs. But I for one do not want to hear any more spoutings from ministers about this. Will we get action? I doubt it. I fancy I know the real reasons. They are not flattering to our political system or to our economy - such as it now is - but this is a topic for another time.

But there is something that even laggardly leaders could do quite easily and that is to allow the revival of municipal banks. Not only would trustworthy and simple services be offered as they once were but in taking business from the commercial predators they would act as 'exemplar institutions'.

'Security with Interest' was the motto of the late lamented Birmingham Municipal Bank from its foundation around 1916 right up to its closure on 31 March 1976. Many people recall the MB (and still cherish their ageing passbooks) and the security that it offered with the City Council guaranteeing deposits.

As readers of this blog will be aware, I’ve been campaigning for the re-establishment of the Birmingham Municipal Bank for some years. Never was it needed more than now. There is a desperate need for a real alternative operating on near-forgotten principles of service with fairness and responsibility and without profiteering and exploitation.

The idea would be to offer complete security to small savers and fair and consistent interest rates for saving, to encouraging thrift – even explaining what this is to some younger people today. As well as security with interest (note the order) there are other mottoes inside the old headquarters building on Broad Street reflecting virtues worth re-adopting today such as: “Saving is the Mother of Riches” and “Thrift radiates Happiness”. In other words real prosperity comes through saving in a trustworthy institution and satisfaction as well as wealth results.

The Council no longer owns this building, but there are plenty of alternatives, especially as the Council is reducing the number of buildings 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 new Central Library would have been a good example) while offering a secure return.

There will be some way to travel however since Government legislation since 1976 makes the establishment of civic banks difficult and restricts the services they could offer. But a start could be made with a savings bank (as was done in 1916) with the scope broadening later if lobbying of the Government to restore former powers proved successful. This would be complementary to existing Credit Unions, which perform valuable if small-scale services but which are not everybody's cup of tea. And while it is true that the commercial banks could attempt to stifle such an initiative (as they tried to do in 1916) any such resistance could be overcome with a bit of political will.

Birmingham could lead the way again – just as it did in 1916 and indeed in the earliest 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 renaissance of our own Birmingham Municipal Bank? A bank for all people and, striking the right moral tone, for all seasons. Perhaps if the Government's bribing and propaganda result in an American style executive Mayor in Birmingham they could get this underway as an early initiative. One can live in hope!