October 23, 2017

What the hell is wrong with bankers?

Posted in Irish Independent · 144 comments ·

The current tracker mortgage scandal has its roots deep in the Celtic Tiger boom when the banks went hell-for-leather to lend to anyone in order to make more and more profits.


We are talking about huge amounts of money here.


Consider the fact that it took Bank of Ireland 125 years to lend out a total of €60 billion and in only three years, from 2004 to 2007, the bank doubled that figure!


One of the products that all the banks pushed was of course the tracker mortgage, an ultra-low interest mortgage linked to the ECB rate. The banks calculated that, although they might lose money on these products, they could then “hook-in” the people who owned trackers and up-sell them more loans for cars, home improvements, and holidays, all of which would carry higher rates. The higher rates for other loans would off-set the losses on trackers and the banks would be in clover.


In short, this was all part of a plan to create a nation of “debt junkies”, tethered to the banks, in hock, and, ultimately, in the banks’ pockets.


Then came the crash, people defaulted, others ran a mile from new loans, most tried to pay back their old debts, and the great Irish banking “up-sell” floundered overnight.


Then of course, once the entire logic of the “tracker-as-gateway-drug” strategy unravelled, the banks got sneaky and reacted in the way they always do which is to screw the customer for the bankers’ own mistakes and miscalculations.  As such, they tried to move as many people as possible off their trackers to mortgages on higher interest rates so that the bank could recoup more money each month.


So, they advertised one thing and sold another!


However, they got rumbled by a few tenacious customers who took them to court for “miss-selling” and now we have a deluge of complaints from thousands of customers who have been shafted.


Now the banks are facing a massive bill and, as usual, the Irish authorities – the central bank and the financial ombudsman – are squirming as evidence of their inactivity mounts.  Yet again, people are asking whether anybody is regulating, protecting the customer, and overseeing the system.


However, the angle I would like to take is not regarding the inactivity of the authorities. This is a bit like blaming the cops from the mind of the criminal. Sure, we’d like them to be better at the job and be more “on the beat”, but the problem is deep in the pathology of bankers.  The angle I want to take is why the people who run banks are unethical and in many cases amoral, much more amoral than people who run other businesses. This is a serious problem. What is wrong with them?


The first thing we have to accept is that the mortgage scandal is theft. When you overcharge knowingly, you are stealing. This is the crime. It is not incompetence or oversight; it’s robbery.


The best expression I’ve heard about banks is from the Californian bank regulator of the late 1980s who, when investigating yet another banking scandal, observed that “the easiest way to rob a bank is to run one”.  This is definitely the case in the tracker scandal.    


The second thing we need to appreciate is that banks go bad from the inside out. The rot always starts deep within the bank. Typically, banks start to take large risks, because it is in the chief’s interest as his bonus is based on lending profitably. In a reasonably competitive market, you can do this by either lending lots at low margins or lending small amounts at high margins. The tracker scandal is the latter, which is about recouping as much money as possible at high interest rates.


The issue is therefore ethics.


Now I realize this is an old-fashioned concept. When we think about ethics and morality, we move into the principles territory.  Ultimately, however, people do have principles.


Organizations should equally have principles, these being the core values of the business.


Core values are, of course, a choice. You can choose to behave well or not.


The problem is that if bad ethics, such as over-charging and stealing from customers, are rewarded they will become infectious. Soon the moral boss sees the immoral ones becoming enriched and he says to himself, “Why not, if everyone else is doing it and getting rich?”.


Over time, bad ethics drive out good ethics.


This is what happened in Irish banking during the boom and it looks like it is happening again but this time in a sneakier, sleeveen way.


How do you fix it?


It seems that the entire problem is wrapped up in the endemic short-term, quarterly-results driven world with which our global financial system has become obsessed.


This would be a great explanation if it weren’t for the fact that the Irish banks are largely nationalised!


The problem is ethics which is cultural. Is it too much to demand a certain morality in the boardroom? Is it too much to ask for a few good men and women who apply morality to their business life? If not, we are in a disturbing place.

  1. https://needtoknow.news/2017/10/45-people-living-california-not-speak-english-homes/

    It is often the policy of the conqueror to try to eliminate the local language as the language is the harbinger of the local culture. Assimilate was the cry and the policy.

    Conversely we are now told that diversity is the key to success of a community or nation. Canada has over 200 ethnic languages spoken. Immigrants are encouraged to “bring their culture with them” not “park it at the door”.
    Perhaps we are being deliberately split asunder to destabilize the existing cultures.
    There is truth to the old expression
    United we stand, and divided we fall.

  2. Investigation of russia Trump collusion turns on its head and implicates Clinton and the Obama government. They funded the dirty tricks campaign, Clintons received millions for their fund and Bill Clinton speaking fees in Russia doubled.



    While this scandal’s original focus was on Uranium One and the Clinton Foundation, it goes far deeper into a Democratic administration than anyone within the party wants to admit. Which is perhaps why President Obama seemed less than excited about pushing the Trump-Russia collusion narrative. Perhaps in a rare moment of self-recollection and awareness, he realized that eventually the breadth of this story would end up exactly where we are today, with all eyes looking at Obama’s appointees, wondering why they sold America’s national security for the uranium-market equivalent of 30 pieces of silver.

  3. “”I have said it dozens of times, and that is I thought the Clinton unprotected email servers were used to hide Hillary Clinton was taking treasonous bribes in the form of donations to a global charity fraud. It is looking like it is now being proven true with the landslide revelations about the shady Uranium One deal that transferred 20% of U.S. uranium production to the Russians. This is, in fact, the real Russian collusion story, and former Secretary of State Clinton, not President Trump, is at the center of it all. It is confirmed that FBI agents have proof there was widespread money laundering, bribery and kickbacks before the deal was approved by Clinton and President Obama. This story will, no doubt, cause many to go to jail. This makes Watergate look like a squirt gun fight.”"


  4. The total debt outweighs all other factors in the economies of the world. Overall no more debt can be accumulated as all are stretched to the max in aggregate. Therefore as oft stated previously it does not matter how good the loan terms are for the new loans they cannot be handled without going into immediate default. All expansion of the currency adds to the debt, by design as all new money is issued as debt. now 1,2,3 4 dollars added to the money supply is actually negative for the growth of the economy. Negative that is. Totally negative. We are going down and all fiat currencies with us.

    Get your money out of the banking system. It is toast.


    “”As the chart shows, more and more printed money is needed to grow GDP. The US is now running on empty. No wonder that stocks have gone up 33X since 1969. All this manufactured money has not benefitted the real economy. Instead it has gone to the bankers and the 1% elite.

    Real GDP Is Down 8% Since 2006

    But if we adjust GDP for real inflation based on Shadowstatistics, it looks even worse. As the chart below shows, real US GDP has declined 8% since 2006 rather than the 16% increase that the official figures show.

    US total debt in 2006 was $45 trillion and is now $70 trillion, a 55% increase. If we compare that to the Shadowstats real GDP growth, we then have a 8% GDP reduction in the last 11 years against a 55% increase in debt. Thus, however much money the US prints, it no longer has an effect.

    Based on the laws of nature, this makes total sense. If you print money which is not a substitute for a service or goods, it has zero value and cannot generate any growth in GDP. This has nothing to do with real money but is a certificate of fraud and deceit. The majority of the $2.5 quadrillion of debt, derivatives and liabilities outstanding today belong to that category.

    Once the bluff of the world monetary system is called, all that $2.5 quadrillion will disappear in to a black hole together with all the assets that were inflated by this debt.

  5. mike flannelly

    I try not to be political. I find it more absurd than following a football team. I follow local clubs followed by Galway, Connacht, Ireland and Liverpool. I have voted FG mostly but Renua in the last election. They were too dithery.
    I got no joy watching Brian Lenihan being lied to by Banking directors.
    I have stated before on numerous occasions that I understand the concept of solutions are more important than witch hunts. Irish people will allow one bite ( sure hes our gangster) if solutions are presented.
    The FAILED IRISH BANKERS and POLITICIANS presented NO solutions. More agressive profit growth. FUCH the consumer.
    RTE and TV3 are just data to my semi ocd brain.
    On the topic of bankers culture I believe that the pressurising and telling lies to Brian Lenihan is important to the continuous improvement process required for fixing Irelands FAILED Banking system.

    The FF, FG and LAB schoolteacher politician were ALL the same. There is no LEFT and RIGHT insider.


    The law is the law.

    As Gaeilge or English.

    Irish banking consumers are charged vague and unclear costs for financial contracts. The contracts are bias in favour of the stronger party to the contracts

    IRISH LAW ??????


    The relevant general terms and conditions provided at clause 3 that: “Rates of interest are altered in response to market conditions and may change at any time without prior notice and with immediate effect.”

    In December 2013, the FSO determined on the evidence before him that the Millars’ complaint was not substantiated. In making this determination, the FSO found that clause 3 is clear in its wording and permits the bank to increase the interest rate “in response to market conditions” and this term did not restrict the bank by reference to the ECB rate.

    The Court of Appeal in the case of Kenneth Millar and Donna Millar v The Financial Services Ombudsman and Danske Bank A/S has upheld the contractual right of the bank to increase its variable interest rate in accordance with “market conditions” without being constrained by general market interest rates.

    With banks on agressive profit growth again it begs the question as to what the hell are “MARKET CONDITIONS”?

    The highly respected Irish legal system tells us that if a financial contract does not SPECIFICALLY state the word INTEREST RATE when discussing the COSTS of interest rates, we must assume that this gives premission to have COMPLETELY VAGUE AND UNCLEAR CONTRACT COSTS.



    • Mike
      The short term interest rates are a reflection of the short term bond rates or the central bank overnight lending rate or some such item. If tracker mortgages are not tied to some identifiable rate then there is no certainty. The mortgage agreement may be void for uncertainty. If I was a borrower I would pull away from such an arrangement that could not be defined.

  6. http://www.thedailybell.com/news-analysis/how-the-blockchain-can-free-you-from-the-banking-industry/

    A question. What is to stop the production of a multitude of crypto currencies?
    2nd question
    I may not understand but I gather bitcoin split 2 for one. What is to stop Bitcoin splitting or doubling tokens to infinity. One of its assets was touted as having a fixed supply available to be “mined” and thus as demand increased the value of the token would increase as they would have to be divided with more and more people.

  7. Truthist




    Trump Blocks Full Release Of JFK Assassination Records After Last Minute CIA Push

    25 years and they need 6 more months to censor documents
    “Irrevocable harm to national security” translates to Israel & CIA did it


  8. Truthist

    What propels industry & commerce ?

    Some say it is currency ;
    ==> The Banks

    Others say it is oil.
    ==> The Oil Industry
    Here is a link which links the 2 ;
    And, here isolated is the 1st graphic ;
    Enlargable too.

  9. http://russia-insider.com/en/uranium-gate-informant-cometh/ri21386

    Monday is the start of the revelations of Russiagate. Who will be exposed. ?

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