Tuesday, 24 July 2012

Southport needs local banks

Walk down Lord St and look at the old banking halls. There are long forgotten names like the Preston Bank..If you look carefully at the picture you can see Preston Bank above the door.

 The site of the Atkinson Library was once the headquarter of a Southport based bank. Names like Martins, Williams and Glyn were once well known. In America and Europe these banks have survived and not been swallowed up by large corporate institutions that 'are too big to fail'.

Many of the old banks were mutually owned -that is they were owned by their customers. Their chief concern was to serve their members. Earning the biggest and fastest buck was not the objective. They were a place where thrifty savers put their money.
The break up of LloydsTSB set me thinking and I wrote the following piece for the Southport Lib Dem website:

Southport Lib Dem Leader Cllr Iain Brodie Browne has urged the government dismember the big banks that have failed us.

'We need break up the big banks, force them to disgorge the building societies they swallowed and split them up regionally to rebuild our local lending infrastructure. Iain told local Lib Dems

'We must re-discovery the old banking creatures inside the belly of the big banks- local institutions like Williams & Glyn's, Martins, TSB and so on.
We need banks that are owned by their savers and not part of some large international group that doesn't care about people in Southport or local businesses

People have been taking a personal stand against bank scandals and moving their money to local, ethical or mutual financial institutions that they feel they can trust. But for many the local choice has been quite limited. So the sale of hundreds of Lloyds branches to the Co-op is not only good news for taxpayer but customers as well. 

Currently, the consumer banking sector is dominated by a small number of banks who have been taking their customers for granted. A healthy banking sector relies on diverse banks competing for customers by offering competitive deals. 

Liberal Democrats have long championed the mutual approach to business because mutuals give people a proper stake in the places they work, spreading wealth through society, and bringing innovative and imaginative business ideas to bear on meeting local needs.

We need a UK version of the Glass-Steagall Act, separating investment (casino) banking from retail banking. The real problem is this. It isn't that banks are somehow unwilling to lend money to small businesses; it is that they are no longer set up to do so. They have no local managers empowered to take decisions. They have risk software that rules out most deals. They have such onerous conditions and charges that many small businesses shun them altogether high street banking as Vince Cable has advocated. That seems to be a bare minimum. The Chancellor has resisted such radical moves but we must press the case

Banks that are owned by PLC's are only focussed on making a 'fast buck' they are simply not interested in the long term economic stability of a company or a locality. One of the greatest acts of economic folly was the destruction of the mutual banking sector between 1986 and 1999.

In one generation we squandered the capital accumulated over decades. We need to re-establish those local banks. Across Europe and America they have local banks and most of them have survived the crash. They have behaved ethically, they have not got involved in risky transitions and they have provided an import source of lending to individuals who want to buy property and small businesses who wish to expand

David Boyle over at the real blog and Susan Kramer have helped inform this posting.

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