Better the devil you know

When someone gets around to organising a competition for the least popular person in Perth it’s a certainty that many of the nominees will be bankers.

Just why bankers, and the companies they work for, should be unpopular is pretty obvious. Banks have a bad habit of wanting customers to re-pay the money they borrow (how unfair). They charge interest (lots of it) on loans, and they charge fees (lots of them) on the same loans. They also open when it suits them (not the customer) and close branches when it suits them.

Having painted the popular picture of prejudice against banks, Briefcase started to consider an even less attractive notion – community banks.

These pseudo-banks, which have become trendy items of discussion in rural Australia and a few inner-city locations, including the Town of Vincent), are a lot more frightening than any conventional bank.

The simplistic view of a community bank is that a bunch of like-minded people gather together to pool their savings, provide good old-fashioned bank services with real, live tellers and make loans to the nice people who live and work in the region. None of those fancy ATMs or Internet-banks.

Sounds wonderful, doesn’t it? Almost too good to be true? Wonder why? It is.

Banks, as we know them, may be bastards but they are the bastards we know. They are not arms of government or an extension of the social welfare department. They sell a competitive service in a highly competitive market and they pay dividends to their shareholders. They are a simple business driven by a simple and pure motive – making profits.

Community banks will have a different, dare it be said, less pure, motive. They will be in the business of pleasing people, taking deposits from friends and relations, running a high-cost service (relative to conventional electronic-based banks) and lending money to local friends and relations.

And that’s the rub. Will a community bank have tough credit-control policies? Will it lend money to someone because he’s a nice guy and lives locally? Will it police loan repayments with ruthless efficiency? Will it be run by bastards who work for the good of the bank and its shareholders, or for the personal gain of management?

Years ago, a lifetime even, Alan Bond once boasted of how he helped a friend set up a bank which would become the private bank of Bond Corporation. That friend, who set up Perth’s first “community bank” was Last Chance Laurie, the late Laurie Connell, and his bank was called Rothwells.

Briefcase feels an old saying coming on... “those who ignore the lessons of history are condemned to repeat them”.

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