WILD COOT: Banking wobble
One may say that banking has not changed from the 13th century or earlier. A man had some money; he gave it to another man to keep. When he had a debt, he gave the creditor a note to go to the holder of his money, and the holder withdrew a piece of the original deposit and paid.
For the service the holder (now a bank) eased off a piece of the original deposit. Simply speaking, this is what a bank is still doing; never mind the frills and the old talk, even though sometime they say “take yuh money and go”. If they said that to me, I would demand my money in cash.
The Wild Coot has been happy to associate himself with this band of moneychangers. You may then say that bankers are a parasitic lot. True! The Wild Coot has risen to the highest echelon of being parasitic.
But being parasitic does not mean being dishonest. With reference to plants, parasitism, according to Google, is when an organism uses the nutrients and water of another plant, the host, to the detriment of the host.
Banks may give you horse dead and cow fat about difficulties with the security of travellers’ cheques, but do not believe them.
One example of banks’ feeding on the host is this recent cessation by all banks in Barbados of issuing travellers cheques. With travellers’ cheques, banks make only a small charge to the customer but have the responsibility to hold, control and account for the issue of such cheques. It needs to keep these safe in its vault.
It needs to interact with customers in a fairly senior position.
At one fell swoop banks decide to stop these travellers’ cheques. “You will have to use your credit card, and we can provide one or two for your comfort, but the interest rate will be 28 per cent.” So the customer has a credit card and he or she can go abroad, spend according to the limit on the card, as many times as the customer likes, each time paying for the purchases with Barbados dollars.
This makes the control of foreign currency in the hands of the public an open season. This has been drawn to the attention of the powers that be in my articles (which they read; as I am told that my name was licking dog during the recent political rhetoric).
Did I say that a parasitic plant uses aspects of the host to the host’s detriment? Recently I applied to a bank cashier for a couple of US dollars. His answer: “Passport and ticket?” Ridiculous, I thought! What is the point in noting it in my passport? Central Bank, you are letting the country down.
Well, the detriment is that we only have less than $900 million to feed the nation. If the government were a private organization, the whole board would be fired.
Our Central Bank said sometime ago that there is no need to curb Barbadian freedom for access to foreign exchange, but the recent plummet in the stock gives rise to another consideration. That this consideration does not seem to be a worry to our banks in the pursuit of expanding the bottom line can be attributed to shareholder satisfaction.
But the banks are losing money!
You see, the dilemma in which the banks are caught owing to the Government’s failed policies and the intransigent approach to overspending, our islandwide owing everybody – this started in 2008. The reluctance to bite the bullet affects everyone and causes both corporate sector and private citizens to take survival decisions not necessarily in the general interest.
Thus the bank wobble, an effort to survive, is unfortunate but understandable. What is also unfortunate is the Central Bank’s apparent concern with “scaring” the public. However, telling us that the foreign reserves dropped to below $900 million is scary enough.
The Wild Coot is not a professor of economics but has studied enough of it to know that there was some merit in the university professor’s suggestion to go to the International Monetary Fund while we still have some traction instead of waiting like Oliver Twist with cap in hand begging the people for non-existent taxes.
• Harry Russell is a retired banker.