|BS: Help local communities by giving money to big banks!|
But when I heard about the Big Society Bank I choked on my locally-produced granola* and reached for my laptop. (* denotes artistic licence, more commonly known as BS)
The problem with both the government's Big Society Initiative and the centrally conceived and funded Big Society Bank is that they both expand the portfolios of central government and multi-national mega-banks, respectively; which is somewhat ironic for an initiative designed to foster local initiatives and encourage community action.
It can't work. At least not like this. And henceforth I shall refer to Big Society as BS.
The BS Bank
I strongly feel the root cause of nearly all excess seen in the banking industry of late is lack of competition: both in the consumer and investment markets. Huge profits and bonuses across the sector are symptoms of profiteering; the antidote to which is better competition, not targeted taxation and tweaks in regulation to temper the bonus culture.
What we need is not The BS Bank, but a multitude of community-driven Big Society Banks (I didn't abbreviate there, because I really meant Big Society and not BS).
Osborne's recent banking "deal" effectively handed Project Merlin money to the established banks.
But wouldn't it have been both more fitting of the community spirit and have gone some way to re-building competition in the consumer and SME business banking sectors to have used this opportunity to fund regional banks and credit unions like the proposed Surrey Save?
I'm not bitter about banker's bonuses, but I am furious that, in the wake of the credit crunch - a time when banks were desperate to get hold of cash to shore their balance sheets - high street savers and businesses alike were offered an impressive inflation-resisting 0.9% credit interest from some of the better banks. Other banks offered far less.
Banks wanted our money, but didn't want to deal with us pesky customers, bypassing the saver and going straight to the government for our tax money rather than our savings.
Had small regional or community banks existed in sufficient numbers, smaller businesses would have been able to borrow from savers, using a more traditional banking model, giving savers a better return and businesses access to much-needed capital.
Project Merlin has instead given the ball back to the big banks with no sign of where, when or how competition in the banking sector will be improved.