Apparently,banks are squealing because regulators take the view that charging charges on overdrafts incurred by charging charges is iniquitous (and quite right; I did actually complain a number of years ago about this and had most of the charges refunded. Not my current bank, I should add). The response seems to be veiled threats of charges on regular accounts. I think that when we recall how our banking system works we might feel that this is profiteering at its worst. What we need to recall is that for every unit of currency we keep in the bank, the bank lends it out tenfold and charges interest on those loans. It's called fractional reserve banking. It is a license to print money. I can see no justification for then adding further charges to our accounts when we are already supplying banks the means to create money seemingly out of nothing.
Perhaps someone can tell me why I'm wrong to think this way, but the profits being reported by the banks tell against the banks' case.
It doesn't mean that a change in one area will result in the end of free banking but there is no consequence-free result.
Regulator's cap may end free banking | | Guardian Unlimited Business:Filed in:
banking,
finance,
profit
No comments:
Post a Comment