This is nuts. UK banks want to charge customers for the privilege of handing over their money and letting banks gamble it in the global derivatives casino.
From the Telegraph:
A groundswell of support for change is understood to be gathering among the authorities. The Treasury’s advisers on the Independent Commission on Banking and the Office of Fair Trading are said to be also backing the proposals, alongside the treasury select committee and financial regulators.
Britain is the only country in Europe to operate a “free-in-credit” model of current account banking. Instead of levying fees on an account, lenders make their money through “stealth charges” on overdrafts and cross-selling of other products. Only India and Australia run equivalent models.
Regulators and officials want to reform the system to boost competition by making it easier to compare rival accounts. They also believe so-called “free banking” encourages mis-selling of financial products, exposes banks to compensation risks and lets customers down.
So the impression that bankers and regulators have seems to be that banks are doing customers a favour by holding onto their money and occasionally losing it all buying junk securities.
Nope. In a free market, banks that tried to charge customers for the privilege would be laughed out of the marketplace. Banks — by their very definition as intermediaries — generate profits from making good investments, not by charging customers for the privilege of holding their money.
Unfortunately this isn’t a free market, and banks can (and probably will) co-ordinate with each other to keep the market uncompetitive. Barriers to entry make it difficult to impossible for new players to enter the market and dislodge the status quo.
As the Office of Fair Trading noted in their must-read 2010 report:
New entrants to the retail banking sector face significant challenges in attracting customers and expanding their market shares, an OFT review has found.
The review of barriers to entry, expansion and exit in retail banking, published today, was launched in May 2010 to identify any obstacles blocking firms from entering the sector or from successfully competing against existing firms, as well as factors preventing inefficient firms from exiting the market and being replaced by more efficient ones.
Two words: banking cartel. Need I say more?
Anyway, I know what I will do with my money if my bank insists on charging me for the privilege of gambling my money: close my account, and find a bank that won’t charge. Even given the current barriers to entry, the opportunity to undercut the bigger players will be too good an opportunity to miss. And I’m sure lots of other people will do the same. Given that some parts of the UK banking industry (especially the Spanish-owned parts, and especially Banco Santander) are already looking shaky, does the UK banking industry really want customers pulling their money en mass?


My advice, fire the top 5% of management and apply the savings to customer accounts.
Mattress stuffing, bitchez.
they already do this, or are bank fees (account keeping fees) on deposits somehow more understandable?
"Another bloody fee ? Bollocks ! Next, they'll be demanding an arm or a leg for a damned online balance inquiry ! Blimey, another financial flesh wound...these infidels have quite the penchant for 'death by a thousand cuts' -- cuts in service, particularly."
http://www.hiltonbarbour.com/wordpress/wp-content/uploads/2010/05/monty-...
Wait. You get free online balance inquiry?
Bill Black gives a primer on looting the banking system:
http://www.planbeconomics.com/2012/04/27/bill-black-on-how-bankers-get-rich-by-looting-the-system/
Well, here in India it's no different and never was till banking was..De-regulated, allowing foreign banks to come and make the Indian Banking Sector competitive.
So now, it's like a Verizon contract. If you keep a minimum balance (talk about risk mitigation for the bank), they wont charge. Get a direct deposit, no charge, get a locker (charge) and the account, no charge.
People are still relatively cheap here, so they are staffed, but the push is Go to the ATM, go On-line, go mobile.
So no cost structure intended in the nearish future either.
It's a constant game of fee wheedling in volume and a total repeat of what I saw in US et. al.
Banking just might be our very personal, species wide Curse.
ori
pro-gress-by-de-sign?
It's perfectly reasonable, in a free market, for banks to charge a fee for holding money in current accounts, because, in a free market, we probably wouldn't have fractional reserve lending, and current account money wouldn't be lent out. The banks would pay you interest held in timed deposit accounts, because that money is what they would be lending out.
Yup, if regulations/laws on banks forced them to actually be "just banks", and to put no risk on the majority of deposits, and minimal risk on a small amount.... they would actually have to charge - because what they would be doing actually would be just the service of making your deposits available at ATMs, and performing transactions... and nothing more.
A bank not requesting any fees, should in a "non-new-normal" world ring alarm bells, because of the implications of what they will do with your deposits.
And a bank gambling your deposits (or even outrightly holding it as a hostage) and asking you to pay for that... is WTFH-die-scumbags-i-dont-pay-for-negative-service.
Break 'em up and create some competition.
That's the only way to stop this shit.
in a free market, we probably wouldn't have fractional reserve lending,
Nonsense. Fractional reserve banking was discovered and formalized in a "free market."
If you mean, "in a banking market heavily regulated by government that forbids fractional reserve lending," then you have a point.
What's next? Negative interest rates? Can't be far off now.
we are there my friend, we are there
So only India, Australia, and the Brits don't charge for accounts? Welcome to the club.
Coffee cans, mason jars etc...basically the same interest rate but a lot more secure ;-)
I use a Peanut can. Don't have an ATM card; have never paid a bank fee. Screw 'em.
The more one has out of reach, the more one has. I like being liquid, it's very liberating ;-)
Everyone should think about it...safety first.
mattresses have been coming down in price quite dramatically lately. call it "your cash security in the internet age" condition. (free "pillow with comfy gun holster" included!)
Correct me if I am wrong but are not US banksters already charging for checking accounts?
My checking account is free if I keep the balance over $1,000, which I do. My wife has her money in a credit union, and it is free entirely. Yes, no charge for online banking at either of our banks.
If one must have a bank account, then a Credit Union is the only way to go.
And hem sewing.
Uncivilized cretin.
Mattress stuffing FULL OF GOLD AND SILVER, Bitchez!
There, fixed it for you!
like i've stated earlier today: banks are no longer in the business of banking!
they're now in the business of wanking.
My wanker banker he understands
I had an Anchor bank account and one at Dime Savings, too.
Each paid 13% per annum for passport savings. Of course this was over 30 years ago. Mortgage rates were over 18% but I was young then and helping my parents on an even older 6% loan so was loving it.
That would be called banking! Today it is wholly different and utterly wretched.
Play this out folks: imagine banks offering 13% to savers in this climate -- how many of the remaining retail investers wouldn't hightail it out of this rigged casino for guaranteed 13% returns? Now take this one step further: the very banks that don't offer interest any longer are all in on the casino scam. You can make the inferences........
Banks don't need your puny little accounts and deposits. They are more trouble than they are worth. The bank can get all the money it needs from the Fed for essentially free. They can gamble with it, loan it to the Treasury, or hand it out as bonuses to the execs.
Not hard at all to dislodge the criminal syndicate.
Step 1...stop spending money on crap
Step 2...take your money out of big banks.
Presto.
Man, I swear you throw down the common sense. Don't take it wrong, but I look forward to your comments like an anecdote from a wise farmer.
Too bad DHS just labeled him a terrorist, otherwise I'd listen to him.....send in the drones.
Now if you'll excuse me, I have to go get my weekly groping in by the high school dop out TSA agent....er, I mean catch my flight. It is rather odd though that they now make me turn my head and cough when passing through security. Oh well, it's for my own good.
\sarc
It's simple, but the majority of the individuals don't have enough money to matter.
In other words: you could motivate 95% of the global population to implement your plan and it wouldn't work, because the other 5% who didn't participate are the ones with all the money.
There has got to be a play on this scene that could apply to Greece....Or probably California when it is our turn. Maybe William Bonzai can make something of it.
http://www.youtube.com/watch?v=oJ6zQZ9GGTY
Free to keep in your mattress, or a fireproof safe with your weapons, ammo, gold, silver, and emergency expatriation kit.
How about the Lakota Bank? Anyone know about that?
To the banks...."Adios Mother Fuckers"
someone forgot to tell the ausssie banks
Force out depositors, to get free liquidity injections from BoE.
When i was an undergraduate student my bank threw an overdraft at me, which i spent, then i went on a bender with credit cards. I thought i was living in a fucking dream, money was never hard to come by for a prolonged period, magic. My credit cards were maxed out along with my overdraft when i got into "trouble" (muttley laugh). In one week i had 3 requests for debits comming from my account... the bank charged me 3 returned debit payment fees, a fee for going over my overdraft, then the 3 card companies weighed in with they're late payment fees too. I think it was something like £200 in fees for one week, so naturally i said, fuck this! So i started writing cheques for cash, did the whole cheque book in to the tune of a few grand. Nice one, cheers bankers, keep throwing money at kids, its a great business model, a lot of them are actually quite responsible.
We have had 'account keeping fees' in Oz for ever? You can get no fee accounts but they require minimum monthly balances of 5K or similar??? Then there is the $2.00 ATM fee for the privilige of not requiring them to staff their branches. The whole thing is a total scam.
The $2 ATM fee is when you use an ATM not belonging to the bank your card belongs to. Still a rip-off though.
If you have a bank account in Austria you are charged a fee...nothing earthshattering about that and I think most banks in Europe operate the same way..
You didn't read the article did you?
Fail #1
You use hotmail.
Fail #2
You use your hotmail as a user name.
Fail #3
Well enlighten me my friend...what did I miss? I suppose you have had a bank account somewhere in Europe and in the United States so you know what you are talking about...
This would be the pertinent sentence: "
Britain is the only country in Europe to operate a “free-in-credit” model of current account banking. Instead of levying fees on an account, lenders make their money through “stealth charges” on overdrafts and cross-selling of other products. Only India and Australia run equivalent models."
IOW every other country in Europe, and possibly the world except India or Australia, including Austria.
Okay, so what does that mean...does it mean if you open a checking account in Britain as opposed to Austria? Does that mean you pay nothing in Britian as opposed to Austria.
The British Bankers' Association intends to discuss Bailey's comments with him. BBA chief executive Angela Knight said: "The UK is unique in its current free banking model: customers who keep their account in credit do not expect to pay anything extra for their normal banking services. In other countries, both in Europe and elsewhere, either customers pay a fixed amount each month or there is a levy depending on the number of transactions that they undertake, plus similar costs to the UK for additional services such as unarranged overdrafts".
So what are we talking about here..I read this as if you open an account in Britian as a private customer and you keep a positive balance aka "in credit" then you don't pay any fees. Whereas in Austria and in many other European countries you pay a fee for the the same scenario.
Thats all I am saying...Go back and read the article and exlpain waht I am missing.
You have fees because you aren't in Australia. Notice the extra two letters.
Germany gives automatic orverdraft facilities far bigger than the UK
In any case, it's wrong. Cyprus has free banking.
"bailout fund included"? i figure we at least deserve a free phuckin' toaster for the cool trillion(s) plus the 100 billion a week in borrowing costs those phuckin' whores left us with...and not some friggin' chincy toaster either. it better have enough steel to weigh friggin' anchor with!! and we're still married to these bitches? WTF?
Actually, this would be a wonderful market development.
Banks have not shown themselves to be able to responsibily handle the single task which has been handed them, which is to direct the lions share of money leverage out into the economy.
With fractional reserve banking, banks are responsible for most of the expansion of the money supply. What they have demonstrated quite clearly is that they are pathalogically incapable of spotting bubbles, and enthusiastically lend into these bubbles on the basis of artifically overvalued collateral, such that when the bubble bursts and the collateral drops in price, credit stops with a bang because the citizens can't pay off debt fast enough to keep ahead of the collateral devaluation. Fractional reserve banking thus exacerbates the money supply swings that accompany the business and credit cycle and amplify its wave height, thus making the cycle much more destructive.
It would be a wonderful thing for banks to give up this privilige, and go back to doing what their skill set really is, which is to hold money and keep it safe. When you think about it, who knows more about the business, for example, of real estate -- a real estate developer, or a banker? So, why do we give the responsibility for allocating money to real estate developers to bankers? Wouldn't it make more sense for a real estate developer with extra cash to lend it to another real estate developer, because then he would intimately understand the market? If the bank wants to take a small cut for facilitating this process and tracking the loan and collecting the monthly payments, so be it. But let's not pretend that bankers should or could know jack squat about real estate development.
Now, relegating banks back to their old job of storing valuables safely and clearing money transfers between individuals means that we would have to pay more for this service, as they would not be able to sereptitiously skim their profits from expanding the money supply, and loans would be much more difficult to come by and would require a much lower loan to value ratio, which means that "growth" would dramatically slow, but growth that did occur would be solid and dependable, which to my way of thinking is much preferable to serially pouring steroids on the economy, only to watch the resultant flash unhealthy, unstable, and unbalanced growth it causes eventually lose its fiat money blood supply and rot and fall off the societal body.
agree totally. If only this type of bank is referred to as depository. if a depository holds on to the money that it says it has, then it should charge a fee for holding the money.
but people putting money into either a commercial bank or an investment bank should do so knowing that the money is going to be loant out and that they could lose everything.
I like the way you're thinking, but banks are money-institutions.
So, why do we give the responsibility for allocating money to real estate developers to bankers?
It has always been the bankers' job to ALLOCATE MONEY. They neither have nor need any concern with *what* the money is allocated for. That's supposed to be a source of their qualification--without knowledge of the intricacies of the businesses they make loans to, they (in principle) are forced to be very conservative.
It's difficult work, and clearly it was much easier for them to simply buy legislation that removes all the risk.
It hasn't always been the banker's jobs. It's only been over the last few hundred years that banks assumed this responsibility. Prior to that, the true banking duties of storage and account transfer where performed by metal smiths, who ran the store houses where money was deposited. Banks deciding that they were the obvious and qualified stewards to steer the money of society coincides with the rise of paper money. I would argue that this has not been a positive development for society.
Now, if we were to go the route of Switzerland, for example, and make bank officials wholly and severally liable for bank losses without the corporate shield preserving their personal assets, then I would argue that banks would at least be more likely to show the necessary restraint. But, you still have to admit that even these bankers still know virtually nothing about the businesses they extend credit to. Just reading a balance sheet doesn't give you the insight necessary to understand a business, any more than reading books about football is enough to make you a great player, or reading lots of historical information about the great depression qualifies you to direct the businesses of an entire country.
Before it was bankers' job, bankers DIDN'T EXIST.
This is a recent industry. Lots of abstract thinking is required before the potential business-model for banking can really make sense.
If you don't consider banking (finance?) beneficial for society, try to come up with a vision for maintaining modern society that doesn't heavily depend on the concept.
Regulation is one approach that has met with various successes and failures over the years.
When thinking of alternate models, I think it would be important to keep two concepts in mind.
The first is the concept of ideal or optimal size. We see this principle all the time in nature. Animals and trees come in varying sizes because they fit in various niches in the ecology. Too small and you don't have enough economy of scale, but too large and you waste too much energy on unnecessary coordination functions. You need to be just large enough to fill your niche.
This principle applies to the economic ecology as well. I would submit that a national scale banking system is too large. Its astounding capacity to expand the money supply as well as its allowance for free flow of capital, usually listed as benefits, have a flip side, which is that they also allow much more dramatic swings to the credit cycle while keeping local responsibility to a minimum. The opacity of credit flows extends plausible deniability to every point of the banking system even when the banking system itself is the cause of bubbles. Much like Congress, in which fingers pointing in all directions protect each individual Congressman from having to take responsibility for their votes, when the system is so large that no one can be held responsible, it has passed the point of healthy balance. There is no such concept as "Too Big To Fail." Instead, there is only the concept of "Too Big To Be Held Accountable."
The banking system has already proved itself incapable of earning life in the ecology of the economy. Survival of the fittest has already passed judgement on it, and it should have been allowed to lapse into the death it earned, to be replaced by much smaller entities who were simultaneously less powerful yet more adaptable. Locally responsible banks are what we need, but they cannot arise while their niche is crushed under the topheavy weight of an undead national banking corpse that our politicians refuse to let die.
The second concept is a natural outgrowth of the first, which is that if you accept the viewpoint that the economy is an ecology, then it is folly to presume that we can a priori design the ideal shape for our banking system to take. Instead, we must be willing to let natural selection do its job, and not try to steer it while solutions arise organically. If we allowed this to occur, we would probably be surprised not only at the efficiency of the economic banking organisms which would arise, but would also be astounded at their ingenous variety.
I thought Amerika was bad! GEEEZZZZ.
Dtop out and turn on, I say!
Invest in marijiana crops, buy gold and silver, stick your change in the ground.
Barter your services for food and shelter.
Screw the banks and their puppets in government.
Drop out, turn and and be free from both in your mind!
Cheers
Why aren't people complaining about the cost of using credit/debit cards? The 2.5-3% tax on everything we buy. Built into every product, unless you get a cash discount? This is where the banks make billions. With the push to an all card economy and the elimination of cash, we have a permanent tax on all consumption.
People need to consider going all cash and leaving all banks. How expensive is a safe?
How do you "fractional reserve" with no deposits?
because it's not built in to everything you buy. it depends on whether the retailer is capable of passing the costs onto it's customers. sometimes that's possible and other times it's not.
Have to love your naivete. You probably think the same thing about corporate taxes as well- all because an econ book told you so. System wide charges of any kind are always built into the price. They are an input, unless there is a sell off or the purveyor goes cash only.
How do you "fractional reserve" with no deposits?
************
Good point and that might be something to do with all of this-
When borrowing and lending was rampant-banks needed the deposits to make FRB work-
Now that game is coming to an end because most can't borrow and those who could wont-so leveraging up deposits is useless-
Deposits are no longer a money making tool and so charging people for storage is the next scam-
But-if everyone closed their accounts-that would be a problem-because the money you deposited is long gone-
Why would you complain about that? Isn't that just a private business providing a service for a fee?
You are behind the times.
The latest government push (e.g. Sweden) is to abandon "cash" and use ONLY debit/credit cards.
Why?
1) Obviously that would assist "Big Brother" to watch over everyone (though not explicitly stated so by any government) .
2) It would allegedly curtail "crime" (lol)
The age of 50:1 leverage on deposits built an expensive retail banking system that will be hard to keep without fees and other sources of revenue.
I own a small business and a business account with Wells Fargo, last statement, .01 in interest and a $10 monthly service fee for a minimum balance, nice racket the banksters have.
There are only about six banks in the UK; almost no small, community banks. In the US we don't have to bank with the TBTFs but in the UK, they have no choice.
B a n k r u n .
This is a logical and needed part of my and of course Zero-Hedges POMO policy. I have advocated the monitization of bankers. Or was it wankers...whatever. We just do not have enough of them like dollars or Euros.
By having the banks charge money to keep our money safe..it will allow us..I mean them.. to hire more bankers and things will start to improve...soon. Very soon.
I have been told the people of England have elected a queen...I mean what could they know about the free enterprise system anyway.
God only knows free checking and free bank accounts has been a give away far too long. The dead beats who take advantage of the banks for their kindness is disgusting really.
Cute!
Don't know about India but Australian banks have been charging for this & that ie. nothing at all, complete bullshit, for years.
Treasurys don't pay squat. Banks in the usa don't hold the mortgages they write. Gubbermint auto loans and loans from big banks and corporations are driving the small banks and credit unions out of business. Big banks gamble with a fedres and gubbermint backstop. Eventually there will be a few big fascist banks and nothing else. Thanks Bernanke.
We are rapidly approaching the end-game. Global fiat currencies are soon going to be worth nothing because the underlying value, the promises of the home nation, are going to be worthless. If you want to preserve the value of your life savings, you will convert it to gold. It doesn't matter what the talking heads say. Gold is a universally accepted currency and will weather this seemingly-unweatherable storm.
Nothing new here. At least they're doing it openly. Those cocksuckers at TCF Bank deliberately screwed up my account, on three separate occasions, to nail me with their $9.99/month fee.
First they changed my "totally free!" checking account to one that required a fee -- oops, the fee drove it negative, well, they had to hit me with $40 in additional fees.
Second time, they raised the number of transactions required to avoid the fee, and buried the notice in the fine print in my monthly statement (does anyone read every last bit of their monthly statement?).
Third time, they let a fraudulent charge go through, despite having paperwork saying that they were never to allow any transaction that would overdraft the account.
Fuck them. At least TBTF assholes like Chase aren't playing games to fuck the customer over on a regular basis. They do all their fucking through Bernanke, who's screwing us all anyway.
That could work in a cashless society.
How do you work that out ? Direct Debit is the trick in Europe - they want the right to access bank accounts and take the money for utilities, mortgages, all sorts of bills. That is what bank accounts do - simply attach drips to the depositor accounts to siphon them off. It is cheap operating but they also used to have a free float for the overnight rate. Now with the Taxpayer funding banks and interest rates being low, banks miss out on revenue so want to make the depositor pay. This is very likely to cause cancellation of direct deposit and a shift of funds. This will cause Depositor Run. It is not as if banks provide superb service.
People are forced into employer banks by having pay sent to bank accounts. The fact is with charges the employer will then have to pay employees for direct-depositing salaries to cover the costs.
In a free market, banks that tried to charge customers for the privilege would be laughed out of the marketplace. Banks — by their very definition as intermediaries — generate profits from making good investments, not by charging customers for the privilege of holding their money.
Unfortunately this isn’t a free market, and banks can (and probably will) co-ordinate with each other to keep the market uncompetitive. Barriers to entry make it difficult to impossible for new players to enter the market and dislodge the status quo.
_____________________________________________
Yes, yes. By competiting, banks strive to keep the market uncompetitive.
Because that is what banks are doing when they push hard on potential newcomers.
When competition was characterized 100 years ago, this component of competition was given a name: duress.
What is the problem with US citizens? US citizenism just works fine. That is US citizenism at work. Should they not be happy with that? Have they not sold US citizenism as the system that should allow humanity to pursue happiness?
Or is it the way they find their happiness, by wallowing in a non existent world, in a fantasy world?
Where does this come from? Why do they need to dress US citizenism as not working properly when it works properly?
Why do they need to claim that banks by exerting duress are not competiting when they are competiting?
Is this that fun to constantly deny the most immediate reality?
What is that?
Where I live they already do charge you a monthly fee for holding a current account.
There are a couple of carrots dangled in-front of you though, mainly the waving of fixed and variable rate mortgage product fees (fees they come up with out of thin air in the first place).
So it's a short term saving, for a long term month after month fleecing basically.
The worse thing about this is that the government force you to have an account for pay, I can't ask my employer for cash, they don't do business with it so in this case, a basic account should be free, at least while in credit IMHO.
The UK banks push this 'charging for current accounts' agenda every few years. Its a bit of a ritual and they always back off. I just don't think it will ever stick - not becessarily because of competition but because of the political outrage it would cause. Almost ineviatbly the competition authorities woudl be called in, Discussions about breaking up the bankd would be had and do remember some of the UK banking system is now state owned so it would be political suicide for any political party to do anything but strongly oppose the idea. Bankers would be fighting a rarely united House of Commons and House of Lords.
Not even the passive UK banking customer will put up with being charged to put their own money in the bank, get paid no interest and then charged to take it out again while bankers take huge bonuses and rely on taxpayer bailouts.
"Unfortunately this isn’t a free market, and banks can (and probably will) co-ordinate with each other to keep the market uncompetitive. Barriers to entry make it difficult to impossible for new players to enter the market and dislodge the status quo."
We have 2 new players in a Century: Virgin Money and Tesco. You could count Santander buying into the British (banking cartel) market but this is the most rigged market in Britain with zero churn of new competitors and entrants
Proof of the cartel and Govts role in killing free markets with legislation (strangulation)
Thatcher stole TSB from its owners to sell to Lloyds Bank which now controls 33% current accounts in the UK. HSBC would love to float off its UK retail business and Barclays threatens to. The Post Office Giro Bank was sold off by Thatcher to Alliance & Leicester (now part of Santander) and every De-Mutualised Building Society (S&L) has been acquired and consolidated.
It is very hard for people holding >£85,000 in liquid assets to find enough Banks to deposit into insured accounts. So corporate depositors who are not insured must be careful and run whenever a run looks likely.
There are no longer accounts at the Bank of England for non-banks.
The situation is better for Banks than in 2007 but worse for everyone else
Recently I put cash in my bank account. and I used it as the deposit was showing
Got a letter a few days later saying I had an unauthorised overdraft!
When I checked my account again to find out why.... they had changed the date the cash was put in so it wasn't there on the day I used it and saw it on my account!!!!!!
They will do anything to slap fees on people now it seems!!
That account will now be closed after they tried to steal money from me.
Spanish bank accounts eat customers' money in fees.
I remember there is a Directive 2007/64/CE about "Istituti di pagamento" (Paying Institute).
They are not bank but they are able to take money and pay.
If they are no bank, they can not lend the money they hold to anyone.
If bank must ask fees to their customers for the money the customers lend to them for the other services, I would suggest it is better to use a Payment Service. At least your money is not lended out without your consent and there is no fractional reserve system.