It's your call !              
Concerned Citizens' Comments                 

Jacques L. St-Arnaud             
Canada                
                


What Is It With Banks, eh !

Submitted : December 6 ^th, 1996

The views expressed are those of the author
and are submitted without prejudice.

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More and more we see news articles and programs berating banks' declining service quality and increasing number of service fees. Alongside these negative stories, we are reminded of the need for banks to be competitive on a global scale, usually in reference to their ever increasing profits.

We get comments such as :

"Bank profits......... Thanks to soaring investment banking revenue, high mutual fund fees, and lower provisions for loan losses......" (Financial Post, 23/11/96)
.......One can add to these reasons such items as inordinate fees - ie. consumer service fees, and reduced numbers of approved "small" personal debt-consolidation consumer loans.

"Consumer loan industry........ $7 billion in loans outstanding..... customer who is shuffled out the door at his bank because he is looking for a small loan." (Financial Post, 9/11/96)

".....signs of stress are present such as a rising rate of personal bankruptcy." (Financial Post, 9/11/96)

When talking about the benefits and impact of lower interest rates, ".....whether householders will spend the gains...... or use the (extra, Ed.) funds to pay down currently high (personal, Ed.) debt levels." (Financial Post, 9/11/96)

".....startlingly poor October figures indicate that low interest rates are having only a limited impact on starts (housing, Ed.)." (Financial Post, 9/11/96)

"Using the market to discipline banks." (Financial Post, 13/1/95)

So here we have banks who are making what is being perceived as huge, exorbitant profits to ensure their strength and competitiveness in a global economy. Some would venture that it is a laudable objective.

However, rather than achieving this goal through judicious investments in capital projects in Canada, or in third world economies (their last attempt having proven more than ill-conceived and disastrously implemented to say the least), bankers have decided that the pliable, monopolized average Canadian consumer would make for a more secure source for increased revenues.

Never mind helping the Canadian economy during its transition to a global niche market economy - like helping small and micro businesses, never mind startups in third-wave non-traditional ventures - that would prove too risky under their present post-trauma mentality.

Better to concentrate on consumers' need for any feelings of security they can get. With all the talk about a bankrupt CPP looming in the future, combined with a lowering bank prime interest rate and minimal inflation, consumers are stampeding to get in on mutual funds.
OPPORTUNITY for greed : banks increase transaction fees and create numerous mutations - opportunities to create and charge extra fees.
RESULTS : higher profits from "scared" consumers.

With stricter approval criteria on personal loans (justifiable to bankers because the consumer is no longer a sure bet - what with job losses, downsizing, salary freezes or cutbacks, ad nauseam), consumers are forced to make do with their credit cards.
OPPORTUNITY for greed : banks increase, then maintain their credit cards' interest rates at artificially high levels.
RESULTS : higher profits with minimal increased expenditures.


In support of the banks' point of view, we are starting to see articles such as "What's so bad about Canada's banks ?", by Charles Baillie, President of Toronto Dominion Bank, as posted in the Financial Post dated October 19th, 1996.

Many articles espousing the virtues of the banking system, providing abstracts of independent supporting studies, and other points to show the benefits, advantages, etc. are now starting to appear in various media.

An article in next week's Maclean's, in the Business Notes section, titled "A $6-billion year for the banks" goes so far as to say that "Retail-banking service charges, a perennial thorn in the side of customers, accounted for about three per cent of profits."

However, such propaganda fails to give details, or to indicate where the average Canadian can obtain copies, or these "positive" supporting studies and points.

They fail to explain that if the retail-banking service charges truly account for only three per cent of profits, why are these charges not being reduced or even eliminated ! A three percent, or less reduction, would not be a major loss to bankers and would most definitely help cash strapped consumers.

They fail miserably to honestly explain the horror stories of small and micro business foreclosures by insensitive bankers, or of individuals trying to get small personal debt consolidation loans - who are refused unless that put up huge collateral or prove that they meet traditional loan criteria.

Case in point is an article in the Personal Finance section of this week's Maclean's, entitled "Borrowing without a pay cheque" which relates the difficulties encountered by two micro-business owners in obtaining a $3,000 loan.

So as abused consumers, we can only say..... what's so bad about bankers..... nothing except their arrogant disrespect for the average Canadian's plight and their unwillingness to help in easing Canada's transition to the third-wave economy - one based on micro scale economics, not bigger is better.

One recent, very pertinent quote sums it up very succinctly. Being part of an article dealing with the current transformation of the Canadian banking system, it stands out as a solid warning sign to those who would abuse of consumers.

"What concerns people is not so much the profits of the big banks, but the attitude that goes along with them...... there's a sense that the banks are saying, `Well, if you don't like it, what are you going to do about it ?`" (Say, doesn't this sound familiar..... see the latest propaganda article "What's so bad about Canada's banks ?", by Charles Baillie, President of Toronto Dominion Bank, as posted in the Financial Post dated October 19th, 1996.)
This quote appeared in the article "The bank of your future" in the Winter/96 edition of Canadian Business' Technology magazine, and is attributed to Linda Crompton, future CEO of the Virtual Citizens Bank, part of the VanCity Bank group.

Well, I for one believe that the quote is a very concise synopsis of the present situation vis-à-vis banking services and fees. The article per se gives us a very clear picture of the services and medium that average Canadians will embrace to achieve the following three objectives :

1. Obtain quality, efficient and fair priced services, and be treated with respect, as human beings, at hours and locations convenient to them.

2. Obtain short-term personal debt-consolidation financing at equitable rates in exchange for appropriate and reasonable collateral, based on flexible approval criteria that keeps in mind today's varied working environments.

3. Obtain a sense of justice (in a social sense) and relief at leaving the big 6 (with their inconvenient and unrealistic bankers hours) to rot in their self- righteous all-mightiness.

Further, I would hazard to say that the majority of Canadians would welcome most any changes to the legislation governing the financial sector, especially as it relates to banking services and fee structures.

You ladies and gentlemen of the Federal Government's Banking Review Committee have it within your power to suggest, strongly we hope, definitive improvements to Canada's financial institutions.

We await your vocal, public submission to all Canadians.