Why Do Banks Exist?

With all the talk and controversy about bailed out banks being forced to cap the compensation to senior executives and high-risk traders, I started to think about why banks exist.

Sure, banks serve the customers that utilize their services (safe-keeping of cash, paying out checks, accepting deposits and granting loans etc), but the real purpose of banks is to maximize wealth for their shareholders. A bank is a business. The only real reason banks "serve their communities" is because of the profit they intend to make off those customers.

In 2006 Edward Yingling, the President and CEO of The American Bankers Association (and former top lobbyist for the Association) "urged Congress to permit the regulators to continue doing what they do best, namely, rigorously apply safety and soundness principles in an environment that permits banks to grow and serve their communities."

What an absolute joke!

Can anyone with a clear conscience explain how banks are serving their communities when they're borrowing money between 0.25%-4% and lending it out at rates that exceed 20% on certain products?

The President and CEO of the ABA (American Bankers Association) is on record having said the following on the Federal Reserves efforts to increase transparency in credit card fees and interest rates: "The Federal Reserve’s proposal is an unprecedented regulatory intrusion into marketplace pricing and product offerings."

Bankers are worried about banks, not customers and communities!

IT'S TIME TO GET BACK TO BASICS .....

What customers and communities really need are Community Banks and Credit Unions.

Credit Unions are democratically controlled financial institutions that elect an unpaid volunteer Board of Directors whose sole purpose is to manage the institution for the benefit of its members and where profits are returned to members in the form of lower loan rates, higher savings rates and reduced fees.

Community Banks focus their attention on local communities and use local deposits to make loans in the communities and neighborhoods where their depositors live and work. Community Banks Officers are real people, accessible to their customers on site, with decisions on loans being made locally.

I think we need to start showing the large Federal and mutli-national banks that we, the people, are not simply pawns in their efforts to rule the world. We're real people, with real needs, with real fears and concerns, and we need to be treated fairly.

Perhaps the loudest message would be heard of we all moved our money to the smaller community banks and credit unions who realistically relate to the real world in which we live.