Last Post for People's Banks

The Rules – different for the rule makers

Do you remember the day when it was impossible to think about letting our banks collapse, at all costs, and those costs appear to be zooming upwards.  We didn’t even have the money to save our own banks, but we went to the European Central Bank with our peasant cap in our hands and they helped us out.

€35M is the cost of toxic debt within Anglo Irish Bank in one bank alone.  We really needed to save that Bank. The original tale of how much of the bad debts we would (Irish Tax Payer via NAMA vehicle) would get lumbered with was €28millon.  That figure has now increased up to €35M.  That is an astounding figure of close enough to 20% of our Gross Domestic Product in 2008. All from one zombie bank that would need saving?

However, this month we learned that Postbank which has deposits of €450 million and 170,000 customers, has 70,000 savings and 35,000 current accounts, 90,000 insurance policies and 10,000 credit-card customers, is going to close down. Postbank came into the hands of BNP Paribas, when they took control of the original investing Benelux bank Fortis in a state sponsored rescue last year. They made the decision to close it down.  The Minister for Finance, the man who knew with absolute certainty that we had to save Anglo Irish was “disappointed but not surprised.”   When he made the decision to save Anglo Irish Bank, it was comparable to dropping a breeze block into canoe, but he did it without hesitation.  As the idiom goes, who pays the piper calls the tune.

The 170,000 customers of Postbank were not paying the piper.  They were simply engaged in what banks used to do, be a place where you could deposit your money, where you could save.  This type of banking, which was used by thousands of people, was the very old time definition of what a bank was.  Also it appears that Postbank might well be the poor people’s bank.  The poor go and collect their social welfare in the post office, they might well open up a savings account there too.  This is not to be compared to the fancy big time banking operation being run by Seanie Fitzpatrick during his time as CEO of Anglo Irish.  The utility side of banking did not appeal to the high flyers in the golden circle.  But borrowing substantial amounts of money at low interest rates, so as to by land, re-develop it, and sell it again at huge profit, whilst only paying off the interest on said loan, and then dividing up the profits on the sweet deal, was much more their style.   The speculators, the developers, the bankers, the board members, the investors, are all part and parcel of such dealing.  These dealers are the same people who make significant political party contributions, or who offer special loan arrangements to our ‘leaders’. 

Compare that to the young mother who collects her social welfare payment, pays off so much from her rent, gas and electricity, and puts some money aside into her savings account down the post office.

In all that talk that we have been listening too about what we need to do to save the economy, very little has been said of what type of banking do we require.  Postbank – with its extensive network, thousands of branches in all types of communities throughout the country could well have been a vital structure towards providing the basic banking facilities are a low or zero cost to the public.  We all require places to put our money and save.  Banks have had a history in this land of not being interested in this side of the business (hence the rise of Credit Unions) with its costs, its administration, and you can only really earn the big bucks when you get into lending people money. The Chief Executive of Postbank Margaret Sweeney said “It was a pure start-up – we were a bird flying with one wing at the moment with just savings products, but we had planned to start lending to customers.”

So in the midst of this crisis we are learning that social banking or basic banking is not important. The pursuit of profit remains important but banks being seen as utility companies is not.

The piper is not paid for that tune, despite the fact that 170,000 people are affected.

The individual is being made to pay for all this mess – the Irish tax payer is paying and yet we aren’t even going to get basic banking onto the agenda.  We have the pantomime of seeing Seanie Fitzpatrick being arrested and brought in for questions.  We have promise that a case is being built against him and others.  We have precious little being done for the people who were unfortunate enough to buy houses at the height of the boom and are now looking down the barrel of negative equity and repossessions’. For those in debt we have a number that you can call.

For those who swindled us all good and proper, we have the sorry sight of them desperately using our money to piece back the system so that they can do it all again. We don’t need to change the government; we need to change the record. We need to show the swindler’s what democracy looks like and 170,000 people would be a good starting point, and knowing that we want things to change is another.

 

  


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