WILD COOT: Not at all times
There is a saying that you can fool the people sometimes, but you can’t fool the people all the time. People patronising a bank might feel that high science is being practised in the back offices of banks; science beyond the ken of ordinary mortals. Perhaps!
Recent reports in the media seem to indicate that such goings-on are being practised in Barbados by today’s bankers. This implication of high science may be professed as justification for high fees and inordinate interest rates on credit cards, and reluctance to help in constructive projects growth. However, the simple basic requirements of banking still hold true, FATCA or no FATCA.
First people placed money in banks for safekeeping. They were given a note (receipt). This note became a banknote that could be changed from hand to hand. When they wanted some money, more notes were passed around. Meanwhile, all was quiet on the waterfront and people in need surreptitiously crept up to the bank and quietly borrowed the money. The bankers lent the money, and therein arose interest and profit.
Since then the overriding interest of banks has been the making of profit from lending the money entrusted to them. They called this money in their bank, savings. Where once these savings attracted as much as five per cent interest, today a small savings may earn 1.5 per cent with a monthly penalty of $10.
It seems that bankers, for whatever reason, are not performing the role of banker on the excuse of protecting the same deposits that they are mercilessly taxing with negative interest (fees).
From when Adam was a lad, and before he met Eve, it was the duty in a bank to know its customers. Scrutiny of incoming clearing (mainly cheques drawn on it) and outgoing clearing (mainly other banks’ cheques taken in) were the means of seeing what a customer was doing.
An officer or two were designated to scrutinise clearings in the morning and in the evening. Thus we looked for kiting (double dealing), street exchange, seeing whom our customers were collaborating with, and so on. So the job of checking on customers to see their habits is nothing new. Since the last 20 years bankers have added money laundering and terrorism to their watchlist. Computers help in this regard. The Wild Coot helped set up the system for offshore banks in Antigua and Barbuda as well as many offshore banks in Latin America, even conducting a seminar in Spanish for Brazilians through a Portuguese interpreter.
I am sure that the recent publication of the “extra work” involved because of FATCA and the demand of correspondent banks is a mere excuse for the justification of fees. From the time of the Patriot Act in 2001, banks have had a person designated as a “due diligence” officer.
It is for their interpretation of survival in the present atmosphere. Bankers, including the Central Bank, should not join in this recent habit of perverting the truth. Just look at the published results in the papers of the operation of the banks. There is hardly an increase in profit from advances and loans where heavy write-offs are in evidence. But there is a reduction in staff costs – maybe the cause of the long lines in the banking halls. On the other hand, there is a significant rise in income from commissions.
The problem has its naissance in the setting up of the Barbados National Bank back in 1977 and the way it operated over the first ten years. The Wild Coot disassociated himself from its modus operandi, and preferred to go his own way. It operated like a wing of the Civil Service.
People of Barbados should be cautious in swallowing the excuses given by today’s bankers on the latest requirements of overseas correspondents banks. The presence of a well-run national bank is woefully missed, now more so than ever.
An old lady whispered to me under the usual scared veil of anonymity that she heard from a secret, undisclosed source that reverse mortgages would soon be offered by the credit unions and perhaps the banks. My lips are sealed.
Harry Russell is a banker. Email [email protected]