March 11, 2007
I've only just started reading the Independent (I need to for a project) which is a little odd as I've once written for it. Something for which I didn't get paid actually. So I'm aware that at least some contributors don't in fact get paid by that newspaper. I do hope one of these is David Prosser:
No one should be surprised that banks continue to find new ways to make more money from their customers.
Indeed, they are businesses. Making money from customers is what businesses do, it is the very reason for their existence.
It is true that most current account holders pay no charges as long as they remain in credit. But that doesn't mean the banks earn no money. The typical current account pays you just 0.25 per cent interest a year when you're in the black. The Bank of England base rate is 5.25 per cent.
In other words, every day you're in credit, your bank makes a huge turn - and it can invest your money at no risk and earn 20 times more than the rate it pays you.
No risk? Tsk. A small risk, to be sure, but none? You have, err, noted that the banks are making higher provisions for bad debts? Showing, err, that there is some risk associated with this turn they make on the float?
Oh, look, David Prosser writing on March 5th this year:
The scale of the write-off is likely to overshadow HSBC's announcement of record profits in 2006.
Tell me, is this newspaper always like this?
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...higher provisions for bad debts...
But let's not stop there. Just what occasioned these bad debts? Can it be put down to the stupidity and avarice of people? Yes and who took advantage of that?
Posted by: jameshigham | Mar 11, 2007 1:49:06 PM
Tim, the phrase "25 times" indicates quite clearly that David Prosser is talking about the difference between the deposit rate and Bank of England repo rate, which is pretty much the definition of risk free.
Posted by: dsquared | Mar 11, 2007 4:09:44 PM
Good on the Banks I say, those damned usurers get what they deserve...
On the other hand...
Defence of Usury by Jeremy Bentham. 1787
Posted by: Forester | Mar 12, 2007 12:15:22 AM