Wednesday, 12 December 2012

The banks raked in the profits and sold our future.

Britain's biggest bank, HSBC has been fined a record $1.9 bn by US regulators for money laundering and sanctions busting. .Money laundering, libor fixing, skulduggery of the highest order; illegality; breaking the law; a law unto themselves. The banks let us all down badly.

Whilst some bankers were cheating and breaking the law; whilst the financial service industry was driving us to ruin, and whilst year on year huge bonuses were being taken,  year on year endowment policies were failing to meet targets,  leaving families in difficulty with their mortgages. I have an axe to grind because mine became one of them although fortunately I didn't depend on it. I started to receive the dreaded letters; first informing me that my endowment was 'on track' (great) but they would keep me informed (ah!); then to say it was 'at risk' (oh!); then to tell me it would not meet its target (inevitable!). Angrily I pulled the plug because I decided I could do better with the money than they could. I cut my losses. But I wondered what on earth the financial 'services' sector had been doing to allow it to happen.

What they had been doing was for ever inventing new 'products' to bamboozle their customers. So many different types of savings, investments, insurance, endowments. Trackers, fixed-rates, flexible this and that; all tweaked to encourage people into debt. And let's be clear they wanted us in debt. They were about selling debt; so much so that unbeknown to us they were selling our debt to each other. A veritable trade in sin. We were being prostituted through our debt. Passed around to be financially gang banged. We were all hung out to dry for the sake of bank profits. 'Service' didn't come into it; financial 'services'  couldn't possible account for what they were doing. There wasn't a service ethos. It was all unethical; all of it! Run by people who appear to have been out of control and who thought they were accountable to no one, least of all their customers. Scoundrels!

When I tackled  my 'friends' in the financial services sector  (yes I do have a few), and particularly those in investment banking, I asked how could they get it all so badly wrong. It wasn't us they replied it was the markets. Markets can go up and down. Indeed they can. How silly of me to assume they had any expertise in the matter. It was all my fault for being stupid enough to think they would take care with my hard earned savings.

But I was informed that it was more likely they would than wouldn't; go up that is. I was shown a wonderful graph comparing the rise of the stock market since the year dot and house prices. Yes it goes up and down, I was reminded, but 'on average', well you can see can't you. On average!   But also wasn't it very silly to base mortgage lending on the premise that it would go on rising and at an unsustainable rate? To offer a product that was unsound is a bit like selling a car knowing it had been clocked. Yes, but they weren't to know of course. And why did they lend so much against so little, often 5 times a persons earnings?

Weren't to know? Then how were we to know?  Millions were mis-sold endowments. Many were mis-sold Payment Protection Insurance. Millions are suffering now because of the egregious unethical behaviour  of the bankers who encourged fast buck sales. And not only are they suffering but they have the ignominy of being called scroungers. The poor are not only shouldering the greatest burden of austerity but they are also being blamed for the poor ethical standards of the bankers.

It was of course unsustainable.  Growth was founded on a false premise; that somehow we could all go on spending the future. Private debt ran out of control fuelled by greed and a have it now culture. The banks raked in the profits and sold our future.

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