Banking

[ossian]

Banks play an absolutely vital role in the functioning of a nation's economy. Without a properly functioning banking system no country can function effectively. Why then, is this crucial part of a country's infrastructure hived off to the private sector whose number one priority is not the country's well-being but the banks shareholders, their executives, traders etc. etc. ? Why do we not have a national bank, a Bank of Britain, with retail banking branches throughout he country, providing the entire range of banking to the population? Such a bank would operate primarily in the interests of the entire country. Private banks would be free to operate if they wish but would not occupy their pre-eminent current position.

Stewart

[Clanad]

You may have a skewed understanding of where the money comes from to start and run the bank. The investors, big and small (at least here in the U.S.) choose to invest in banking for the return on their money (by way of interest). For that privelege they take huge risks and are governed by a plethora of regulations.

If the state, such as your suggestion, would start an run the bank the money would have to come from the taxpayer. It's been our experience (with the exception of a few notable exceptions) that the corruption, waste, fraud and abuse inherent in government run entities would demand more and more investment from the public purse with little hope for a reasonable return on that investment.

In a sense the privately owned banks support the state in the taxes they pay. Often exorbitant taxes, since any income is often taxed multiple times...

[lcg]

in short....because money makes the world go round. there are haves (1%) and have-nots (the 99%), and we always end up paying for it. that's it in a nutshell....x

[rojash]

" corruption, waste, fraud and abuse inherent in government...In a sense the privately owned banks support the state in the taxes they pay. "

Ah, yes. That'll be why in almost every country in the world, the banks had to be bailed out due to their own corrupt practices.

[factor-fiction]

It hasn't been 'hived off' to the private sector, just as M&S or Microsoft haven't been hived off- they've been created by the private sector.

[boxtops]

Agree with factor - banks are private from the start.

[factor-fiction]

If the government wanted a new publicly owned bank it would either have to set up a brand new bank from scratch or take over one or more existing banks.

Setting one up from scratch seems a non-starter as I doubt the civil service has the skills, resources or time to set up branches and systems, administer it and raise the finances. Also it would probably take a long time to have anything more than a tiny market share.

The only way I can see for it to to become the major bank would be to take over the main players but I'm not sure it can do that as they are generally worldwide organisations - Santander for example is Spanish.

What could happen is that the government could buy up the remaining shares of RBS and run that as a public bank but it would have only a small share of the market

[ossian]

When I used the word hived off I meant that Government divested themselves of the responsibility for this crucial part of a country's infrastructure. I have no problem with private banks per se, I just do not believe that they are the right people to manage retail banking for the nation. I am not an advocate for big government. I believe that this one of the major problems with most western countries, certainly most European ones. The national bank would be, to the maximum possible extent, independent. I suppose it would function like the old fashioned Building Societies, with current accounts, mortages, loans to business etc. etc. . This is not unlike the proposals we see for separating retail banking from casino type banking. There is no intrinsic reason why an independent, efficient, state run bank cannot outperform the lot we have at the moment.

Stewart