Banking on you

112

The announcement that the governments of the East Caribbean Currency Union have asked the Central Bank to establish a committee to look into existing bank charges was a welcome move that almost went unnoticed.  We would like to think that this move is premised on an assumption that said fees are too high.  Good move!

Our prime Minister has advised that the setting of fees is an entirely private matter, and neither the governments nor the ECCB has any authority over the rate of fees charged. A source explained that people are not borrowing, and many loans are “non-performing”, so Banks are seeking ways to make up shortfalls in income.  Translation:  the less able, who may hardly have qualified for a loan in the first place – and would have sacrificed to repay – have to help pay for the failures of the financially able.

While it may be true that banks are losing money, they continue to maintain full benefits structure, which belies the point about loss.  One recalls that recently in the USA and UK, when several banks were rescued by government, the executives still received handsome bonuses, a fact that incensed the tax paying public.

We do not understand what additional costs is involved in managing an account today compared to yesteryear, or in managing an account that falls below minimum balances, that merits a monthly deduction which, in some cases, does not even cease when the account balance reaches zero.

We do not understand the term ‘dormancy’ and why it is so expensive to waken an account.  Neither do we understand why there is such a huge spread between interest charged on loans (which uses the people’s deposits) and interest paid on people’s savings accounts.

All this is happening at a time when other money management businesses seem to be thriving.   large customer bases with small deposits might be more of a bother to the banks to maintain than fewer customers with large deposits and a wider borrowing base that would shoulder their responsibilities and pay back their loans

Commercial banks are set up to make huge profits while penny banks and credit unions are designed to serve the poor and less fortunate.

We haven’t heard any argument against the application of fees by commercial banks.  Rather, the debate is about what constitutes an acceptable rate. That is where Governmental intervention may be necessary.