More From The Whistleblower

[Warwickshire Lad]

http://news.bbc.co.uk/1/hi/business/5029530.stm

A powerful insider breaks the banking industry's code of silence and reveals how the High Street banks deliberately target their customers and push borrowing.

Speaking exclusively to the BBC, this whistleblower is a key decision-maker involved in retail banking with one of the main High Street banks.

Her past experience in every department - from strategy to planning and sales - has given her an extensive understanding of how the banks do their business.

"In all my years of experience in the banking industry, I would say that consumers should be very, very wary of their banks.

Should be good ...

Edited June 4, 2006 by Warwickshire Lad

[Waiting Patiently]

http://news.bbc.co.uk/1/hi/business/5029530.stm

Should be good ...

The consequences of Britain's borrowing crisis are so serious that they are now hitting the banks themselves. They are facing a mountain of bad personal debt................snip...........

"Can the banks really change a habit of a lifetime of irresponsible lending? At the end of the day that's what has made them their profits," the whistleblower said.

At a time when the governor of the Bank of England is warning of the serious social consequences of over-indebtedness, the whistleblower gives a real insight into a culture of lend, lend, lend in Britain's banks and helps to explain why Britain has racked up record levels of personal debt.

You're right, it looks interesting, and surprising coming from the BBC, but just to correct you : it's on at 9.15 am not pm.

[Warwickshire Lad]

You're right, it looks interesting, and surprising coming from the BBC, but just to correct you : it's on at 9.15 am not pm.

Oops, I thought it was in the evening like that other programme. Thread title corrected. Thanks.

[warwickbloke]

http://news.bbc.co.uk/1/hi/business/5029530.stm

Should be good ...

Does anybody ever symphasise with the banks being in a 'no win' situation here.

There are tales of the banks not giving credit & what bounders they are, as the applicant always pays their debts, & also claims of 'irresponsible' lending to those who cannot afford it.

Surely every loan application asks for income & outgoings & if the applicant lies about this it is not the banks fault.

If people get into debt it is their fault alone & not an advertising ploy by the lender.

Banks are being treated in the same vein as pubs where it is the pubs fault if customers are drunk.

Everybody wants someone else to blame!

This article is just another avenue for folk in too much debt to point at & declare "it ain't my fault".

[SarahBell]

.

Surely every loan application asks for income & outgoings & if the applicant lies about this it is not the banks fault.

If the bank doesn't make checks as to the credit worthyness of the person wanting to borrow money - satisfying itself that the income meets the expenditure plus the cost of the loan plus some breathing space for problems then it is the banks fault. At what point it is possible for a person to falsify records and credit checks? If someone did so deliberately then that debt should not be allowed to be wiped off by banruptcy.

[Guest The_Oldie]

The trailer said that banks have two categories of customer...

1, Customers who spend to the limit of available credit, paying off the minimum per month on cards. Those are the ones they keep at all costs.

2, Customers who pay their card bills in full each month. Those are the ones who get sent junk mail to encourage them to spend more.

Sounds like an interesting program. Shame about the screening time though, as not many people will be able to watch it.

[warwickbloke]

If the bank doesn't make checks as to the credit worthyness of the person wanting to borrow money - satisfying itself that the income meets the expenditure plus the cost of the loan plus some breathing space for problems then it is the banks fault. At what point it is possible for a person to falsify records and credit checks? If someone did so deliberately then that debt should not be allowed to be wiped off by banruptcy.

It's been demonstrated many times that bad debtors cover their tracks by borrowing to pay what is borrowed.

This does not mean they have poor credit ratings, just irresponsible.

If they don't declare all outgoings on their application banks are not able to check on everything.

If applicants have distorted the truth then they are guilty of fraud.

It still is not the banks fault.

If you buy a hammer then hit somebody over the head with it the hardware store cannot be held responsible.

[marko]

Does anybody ever symphasise with the banks being in a 'no win' situation here.

There are tales of the banks not giving credit & what bounders they are, as the applicant always pays their debts, & also claims of 'irresponsible' lending to those who cannot afford it.

Surely every loan application asks for income & outgoings & if the applicant lies about this it is not the banks fault.

If people get into debt it is their fault alone & not an advertising ploy by the lender.

Banks are being treated in the same vein as pubs where it is the pubs fault if customers are drunk.

Everybody wants someone else to blame!

This article is just another avenue for folk in too much debt to point at & declare "it ain't my fault".

This really is the eternal question: who is to blame?

Banks are no doubt pushing easy credit because they make most of their money from debt slavery - they know it, most thoughtful people know it, but the banks will obviously never mention it explicitly. That is why this lady is being called a 'Whistleblower', when in fact all she is doing is highlighting a truth that is pretty plain for all to see.

People should be more responsible for themselves, and I can't stand idiots who rack up debt as consumption. I also have little time for the Mrs Begs of this world who borrow vast sums of cash in an effort to set themselves up as Landlords for the rest of their worthless lives.

But on the other hand, banks, CCCs etc spend a lot of time and effort on persuading people to increase their spending and accumulate debt. I recall meeting a girl who worked at my company for 6 months on a placement. She was bright, studying at Cambridge, and the year before had worked for Capital One in a department that was working out the best places, frequency etc. to place CC advert slips into magazines....they were doing quite a bit of analysis on this subject, purely to increase the number of idiots who got one of their cards.

Lending irresponsibly is supremely profitable for the lenders.

Basically, in our modern comsumer society we are swimming with Sharks all the time: people (by no means everyone...plenty of good people out there too) who want to exploit and manipulate others for their own gain. Bankers are in my book definitely the worst offenders....but there are many others as well: and they employ AN ARMY of advertising executives to work out new and pernicious ways to excite our spending appetites. These people will use very carefully constructed television adverts, mail shots, magazine advertising, promotion, promotion, promotion to entice you to buy their product. They are in turn backed by a media machine that relies predominantly on advertising revenue to survive, and therefore glossy magazines, Sunday Supplements, Celebrity watching, Holiday programmes on the Television etc. are constantly promoting massive comsumption as the desirable lifestyle....and so consumption becomes our highest cultural value. unquestioned by virtually all.

Very sad. I was listening to Radio 4 the other day in which Oliver Letwin was on the panel of a current affairs program. In response to a question on climate change and the need for lifestyles to change he said something that I thought was bang on: he said that we can legislate a bit to deal with this problem, but at the end of the day people will only change from their consumer lifestyles significantly when it becomes 'cool' to do so in our culture. He is absolutely right.

My longwinded point is that banks make a lot of money out of issuing debt - they therefore promote help promote borrowing perniciously. This, coupled with all the pressures to consume, definitely gets a LOT of people into trouble. I think of myself as free-minded enough to not fall for their little game, so I am debt free, but I understand that many have: the system is obviously failing, so reigning in the banks (and whilst we are at it a reform of the money supply) is a good idea.

They ARE partially responsible for the mess we are in.

[sam]

What i would like to know is, if we have such fantastic miracle economy why are we borrowing so much!!!!

My idea of wealth is OWNING something, not buying something with borrowed money then spending a lifetime paying it back WITH interest.

I remember when people used to look down their noses at people who filled their house with items that were paid on the never never, as far as i am concerned what we have today is no different except from one thing, it is socially exceptable.

[warwickbloke]

They ARE partially responsible for the mess we are in.

They are responsible only by being there.

They are a business advertising their wares.

Banks have competition from other banks & clearly will try to win trade.

They also quite plainly state the pitfalls of overborrowing, lose your house etc.

They are nothing more than another one of many services available.

If people choose to misuse that service it is the ulitmate fault of the user, not the supplier.

[DoubleBubbleTrouble]

Blaming the lenders themselves is pointless. They have behaved entirely predictably given no credit regulation and a fiercely competitive environment.

Social and wider economic well being will never be factored into individual companies strategies unless regulation makes it financially prudent for them to do so. Without this they will inevitably try to increase the debt burden up to the maximum point an individual can afford despite the fact this clearly isn't beneficial socially and to the wider economy.

The blame for this falls straight on the government.

The FSA should have been regulating personal and mortgage debt much much sooner and they should be regulating the maximum amount of debt an individual can take on. Staggeringly they are not, you have to ask yourself why is this the case when Britains debt mountain is so clearly not in the public interest.

See this discussion from the Priced Out "More Homes and Sensible Loans" strategy for an insight into how mortgage debt isn't regulated.

Since 31st October 2004 the Financial Services Authority has been responsible for regulating the sale of mortgages. Currently regulation leaves determination of the level of debt borrowers can assume up to the individual mortgage lender with their only requirement being to document their policy and that they have considered whether the customer can afford to repay the debt at the offered interest rate (and with the new rate at the end of any discounted period).

Priced Out does not believe this is an adequate safeguard, neither for protection of borrowers nor for the overall health of the housing market.

We believe that the FSA should require lenders to consider affordability of a mortgage under a more explicit formula not determined by individual commercial entities but by the regulator itself. This formula should consider their ability to repay under a variety of interest rate scenarios (not just today's unusually low rates), should enforce upper limits on lending to salary multiples and most importantly should consider the effects of credit availability on the UK housing market in general.

Additionally given the dramatic increase in activity in the Buy To Let sector we believe it is now time for Buy To Let mortgages to be regulated by the FSA.

Edited June 4, 2006 by DoubleBubbleTrouble

[FirstTimeBonkers]

They are responsible only by being there.

They are a business advertising their wares.

Exactly. So the way to solve this problem is by using normal business criteria - make it extremely unprofitable for the lender when the customer is unable to pay. When their bottom line is at stake, they will soon start exercising a little more caution as they operate the "free money" machine.

[warwickbloke]

Exactly. So the way to solve this problem is by using normal business criteria - make it extremely unprofitable for the lender when the customer is unable to pay. When their bottom line is at stake, they will soon start exercising a little more caution as they operate the "free money" machine.

I don't think we are taking all into account yet, people do not always directly approach banks for loans, they are often arranged on their behalf, mortgage advisors, car sales, double glazing, store cards etc. many of these businesses could not survive without an element of credit being available, especially with the lifestyle as it is at present.

Have you ever seen the faces of potential customers at a salesroom waiting for an answer if they have been accepted, then receive a positive response, They consider themselves detached from the whole process, often with the attitude that the lenders may have been foolish to extend them credit.

If lending criteria was too tightly reigned in, by the time people were ready to buy again there would be nothing left to buy, that is if anybody still had a job.

Banks are ultimately the victims as well, many lenders are presently practising damage limitation as the debt losses become more apparent. I still think we will see many resignations of top bankers before the crap starts flying, smugly declaring all was fine when they were in charge.

The ultimate losers will be the responsible borrowers as usual.

Damned if I can see a solution to this mess.

[Catch22]

Marko that was an excellent post.

Many times on this forum I have warned in "one liners" that bank debt supported by the connivance of central government, has enslave the populace. When the shackles are many and heavy, subservience of the populace is for the most part guaranteed.

Subjugation by the muzzle of an M16 assualt rifle is how they do it in the Third World, and by way of bank debt in the First World.

All wars, and all debt slavery are financed by the world bankers, they conjure the shackles that bind you out of thin air, they are indeed the "Masters of this World of Ours"

Democracy ...for the people by the people ....my @rse

[Without_a_Paddle]

Marko that was an excellent post.

Many times on this forum I have warned in "one liners" that bank debt supported by the connivance of central government, has enslave the populace. When the shackles are many and heavy, subservience of the populace is for the most part guaranteed.

Subjugation by the muzzle of an M16 assualt rifle is how they do it in the Third World, and by way of bank debt in the First World.

All wars, and all debt slavery are financed by the world bankers, they conjure the shackles that bind you out of thin air, they are indeed the "Masters of this World of Ours"

Democracy ...for the people by the people ....my @rse

If the general public fully understood the fractional reserve banking system and how inflation is used in order to extract 'value' from their labour then there would be riots within days.

The reality is, there is no escape from this system for most people.

Also, in return for heavy taxation (in its many forms) our govt does at least provide services in the form of schools, NHS, police, roads, benefits etc. So it is better here compared to other parts of the World.

Also, the current system has actually rewarded those that took on debt in the past and punished those who 'saved' instead.

So the best advice is that which enables people to be 'less exploited' than they otherwise might be.

[Golden Shower]

Remember, it's always the banks fault!

Silly feckers deserve their life of slavery.

[CrashedOutAndBurned]

I'll recommend Grip of Death my Michael Rowbotham again, which is a pretty good overview of Monetary Reform issues(first chapter here).

He isn't a goldbug, or a full-reserve advocate. He just takes the broad position position that a certain amount of our money should be spent, not 'lent' into existence.

I'd like to see public works funded by debt-free government money and the ability of commerical banks to issue credit scaled back to compensate.

60% of all money in circulation came from mortgage debt. So when a so-called 'debt monkey' 'borrows' huge sums to buy houses he's not simply enslaving himself but colluding with the banks to undermine the money in our pockets. As most of our money is created as debt we can't as a society all 'live within our means'. We HAVE to get into debt or at least someone has. I'm debt free but my job and my income is paid for by others being in debt. People in debt are just the fuel that kepts the insanity ticking over.

In the old days monetary inflation was at least out in the open, so people could be freed from debt slavery by larger wage demands. Now monetary inflation is running at 10%+ a year, but we call a laughable measure of sweatshop-made imports 'inflation' and force people to take, if they're lucky, 2% pay rises. I think most would agree living costs have risen more in line with actual monetary M3 inflation.

Also in the old days governments ran big deficits so public works could at least be provided without the general public being in debt. Now the debt has been externalised and we have to pay more for health, for education, for transport than ever before and we're paying the price of monetary enslavement more than ever.

Edited June 4, 2006 by CrashedOutAndBurned

[marko]

If the general public fully understood the fractional reserve banking system and how inflation is used in order to extract 'value' from their labour then there would be riots within days.

The reality is, there is no escape from this system for most people.

Also, in return for heavy taxation (in its many forms) our govt does at least provide services in the form of schools, NHS, police, roads, benefits etc. So it is better here compared to other parts of the World.

Also, the current system has actually rewarded those that took on debt in the past and punished those who 'saved' instead.

So the best advice is that which enables people to be 'less exploited' than they otherwise might be.

Unfortunately true. The way that money is supplied to our economy really is at the root of so many problems, not least of all that collectively we are sliding further and further into the red.

Widespread and increasing debt is an inevitable consequence of how money enters the economy. It is a simple mechanism...so simple that 'the mind is repelled' as JK Galbraith (RIP) put it, but ask even very highly educated people about it and all you get is a blank stare.

And even those who refuse to enter into debt-slavery are punished as the value of their money erodes over time due to the increasing money supply.

[Bingley Bloke]

A friend of mine tried to get a credit card so he could transfer the maximum balance into his offset mortgage. They wouldn't let him have the credit card and wouldn't explain why – His house is worth £200K and he only owes about £18K on it, so he's hardly a credit risk. Of course, this doesn't stop them sending him continuous junk mail telling him to take out one of their credit cards. He has now taken to sending whatever they send him, along with a handful of potato peelings and a couple of used tea bags, back to them in the 'Business Reply Service' envelope.

Seems the banks aren't interested in lending money to people who are genuinely credit worthy!

[marko]

I'll recommend Grip of Death my Michael Rowbotham again, which is a pretty good overview of Monetary Reform issues(first chapter here).

I'd like to see public works funded by debt-free government money and the ability of commerical banks to issue credit scaled back to compensate.

Good post and I quite agree - it has been done before in certain instances throughout history. Of course private bankers and FRB advocates (i.e. the parasites who get rich off it) would aruge that money issued by government would be inflationary...

...not at all like their 10% a year increasing debt money supply then eh?

Government should be creating and spending money into the economy, debt-free. This could be inflationary if they spent 100% of GDP a year or something ridiculous, but if government money-creation and spending was capped at say 4% of GDP, then that would be the % increase in the money supply and hence would result in a low level of inflation - this would be OK surely?

It would also allow taxes to be reduced (most tax goes on servicing the deficit anyway). In fact I suppose you could imagine a situation where ALL government spending was through government-created money, and formal taxation was abolished - the inflationary impact of the government-created money could then be considered the tax resulting from government spending eroding the value of your money.

In emergencies (times of war etc.) the 4% cap could be increased if needed.

Banks would still be able to operate within the market and perform the role which they are ostensibly there: savings pooling for investment and efficient capital allocation, involving lending REAL money carefully to business.

Get the magic-money-grubbing banker parasites out, that's what I say. This stuff was extensively debated after the great depression - may be the chance to bring it into the public eye is coming again soon.

[warwickbloke]

We HAVE to get into debt, or at least someone has. I'm debt free,

In the old days monetary inflation was at least out in the open, so people could be free from debt slavery by larger wage demands. Now monetary inflation is running at 10%+ a year, but we call a laughable measure of sweatshop-made imports 'inflation' and force people to take, if they're lucky, 2% pay rises. I think most would agree living costs have risen more in line with actual monetary M3 inflation.

Contradiction in terms?

On the other hand, giving low wage rises will discourage debt as gradually nobody will be able to afford it. High wage rises will just compound the problem.

[Dr Doom]

Widespread and increasing debt is an inevitable consequence of how money enters the economy. It is a simple mechanism...so simple that 'the mind is repelled' as JK Galbraith (RIP) put it, but ask even very highly educated people about it and all you get is a blank stare.

I explained to one of my collegues yesterday how the government funds spending not covered by income taxes.

It prints IOUS (treasury bonds), and the central bank (the bank of england) buys them with money it creates out of nothing.

His response "what, is that true?". It is so obviously fraudulent when you understand it.

Unfortunately those with a vested interest in protecting it have done a fantastic job of creating

an array of smoke and mirrors, and a veneer of respectability so the man in the street,

or even the highly educated person can not usually figure it out.

Another anecdotal story, I was speaking to a bond manager of a major investment bank on holiday

a few months ago. This was not long after I had watched money masters for the first time and

had my whole belief system turned inside out. Asked him about the bank of england and who owns it,

"it's part of the government" he said. It's a privately owned central bank I retorted. To which he was

a bit bemused but willing to enter into a discussion.

I eventually put it to him that "The House of Rothschild" is actually ultimately in control of the

bank of england. To which he went very quiet and looked like he was really thinking.

So there are probably plenty of people within the system who do not really understand how it works.

[nevajism]

its seems to me the money system is the main cause of the problem

so far ive read the grip of death, the mystery of banking and watched 'the money masters' (all recomended by people on this site) all very interesting- does anyone have any other recomendations ... i know a couple of bankers (engineering phd's working in the city) and when i quiz them they seem to have very limited knowledge of how the system works - i guess most people are just interested in how to improve their lot within the current system and anything else is academic -- can anyone tell me, what are the standard textbooks that a banker or macro economist would refer to on the money system?

[warwickbloke]

I explained to one of my collegues yesterday how the government funds spending not covered by income taxes.

It prints IOUS (treasury bonds), and the central bank (the bank of england) buys them with money it creates out of nothing.

His response "what, is that true?". It is so obviously fraudulent when you understand it.

Unfortunately those with a vested interest in protecting it have done a fantastic job of creating

an array of smoke and mirrors, and a veneer of respectability so the man in the street,

or even the highly educated person can not usually figure it out.

Another anecdotal story, I was speaking to a bond manager of a major investment bank on holiday

a few months ago. This was not long after I had watched money masters for the first time and

had my whole belief system turned inside out. Asked him about the bank of england and who owns it,

"it's part of the government" he said. It's a privately owned central bank I retorted. To which he was

a bit bemused but willing to enter into a discussion.

I eventually put it to him that "The House of Rothschild" is actually ultimately in control of the

bank of england. To which he went very quiet and looked like he was really thinking.

So there are probably plenty of people within the system who do not really understand how it works.

This is like expecting the guy fitting seats on the car production line to be able to explain the principle of the combustion engine.

Why the hell should they know? or even care.

For most people in debt their only concern is to get the product they want, consequences to this are an afterthought.

This is the root problem, immediate personal gain.

Where the money comes from & where the profits go to are of no interest.

At least not till the debt becomes unaffordable.

[marko]

This is like expecting the guy fitting seats on the car production line to be able to explain the principle of the combustion engine.

Why the hell should they know? or even care.

For most people in debt their only concern is to get the product they want, consequences to this are an afterthought.

This is the root problem, immediate personal gain.

Where the money comes from & where the profits go to are of no interest.

At least not till the debt becomes unaffordable.

They should care because in any even just modestly advanced economy, money has a primacy, importance and effect on society unmatched by any other institution - if the way that money is supplied to the economy is fraudulent, then it negatively effects everyone, except of course bankers and their slimey mates in government.