Are you sick and tired yet of people whining about banks? Well I am. I am Pro-Bank and I vote. And I have this blog where I get to defend banks from the tiresome blah blah blah about fees and loans and bad customer service and all the other things we hate about banks. The Stranger, true to form, has allowed some of it’s writers to engage in a sustained screed about banks. They even use the “F Word” in the headline, and I don’t mean financing. But settle down for a second and let me explain why you should run right out and buy a cup a coffee for the nearest banker you can find.
Before I do that, let me say I hate banks! Their fees are terrible, I can’t get a decent loan from them, and they have terrible customer service. There, I said it. I’m one of the 99 percent–that hates banks. I’ve logged more hours than anyone out there yelling at banks over the phone over charges, mistakes, poorly communicated rules and agreements that cost me money. I’ve asked for more supervisors and been hung up on more than all of you. Maybe I need help, but still, I’ve battled banks with my bear hands clutched around a phone receiver. But without banks our world would simply end, and they perform a critical service for us all.
First, where else are you going to put your money? Yes, yes, I know a credit union. I have some money at BECU too. In fact, I’ll sign you up. They’ll give me fifty bucks for getting you to join. But credit unions are banks too, and you’ll find that BECU cuts a lot of corners to save you money and attract customers. My guess is that consumer banking is a huge loser for almost any banking system. Think about it, BECU has like three branches and they have really cool ways of doing things like depositing a check that require no people. People cost money, and BECU spends its cash on technology not lots of smiling tellers.
The average bank customer probably costs the average bank more money than we’re worth. We are constantly making deposits and withdrawals, we have low balances, and whenever we’re confused we burn up the operators time at $12 dollars an hour so that we can realize that, in fact, that pending transaction is there after all. Banks are like any other business, they make money from decreasing costs and increasing revenues.
Imagine if you were holding on to the allowances of 50 first graders. Lots of nickels and dimes from allowances and the tooth fairy. Those kids are going to want to count their money constantly, play with it, then give you more of it in small deposits of another nickel and dime and maybe even a penny. I’m not being mean. Just think about what that would be like. It would be a hassle and there isn’t much you could do with that money because it doesn’t add up to very much.
The reason why banks charge fees for silly things like a phone call is simple Folkenomics. If you have to pay for something you won’t do it. If you don’t do it, it saves the bank money. The reason why you get charged fees isn’t to generate more profits, it’s to get you to stop using the bank so much with your very small transactions. Let’s face it, most of us are not moving around hundreds of thousands of dollars. Are banks really going to make a trillion dollars charging me a fee here and there. I doubt it.
Why don’t banks make a bunch of money off of us? Because banks make money when then lend money out. Money sitting in a vault is a bad thing. The reason why banks give you such a high interest rate on a Certificate of Deposit (a CD) is because you promise to leave it alone for a long time. That means those funds can be made available to other people. Most of us can’t park all our money that way, we need liquidity, and all those little accounts with billions of tiny transactions suck up a lot of time and resources and money.
And that brings me to the second reason we need and should love banks. They loan out money. That cool bar that you like to hang out at; built with loans from a bank. That house you live in; mortgage from a bank. That car you make a payment on every month; a loan from a bank. Banks make money when they give money out. It’s true we’re in a liquidity trap, a situation that means banks are sitting on lots of money but they are afraid to lend it out. They’re afraid to lend it out because the economy is bad and they worry they won’t get paid back.
Now to the third reason we need and should appreciate our banks. Banks can lead innovation and have. When properly motivated and incentivized banks will risk money on lots of crazy ideas like the ones Bill Gates and Steve Jobs each had about starting Microsoft and Apple. Banks make a difference where we need it the most. Sure, they have to be persuaded to take risks, and risk has upsides and downsides as we’re learning. The idea is to get banks to take risks on more sustainable projects, not blow up big banks or any banks.
Life without banks would be a post apocalyptic nightmare world full of bartering for things, hoarding cash and valuables, and having to defend our wages with our lives. Life without banks would mean no loans for things we need, want, or that we think we could use to make more money for ourselves. And finally, life without banks would jeopardize progress and innovation, denying entrepreneurs and people with great ideas the cash to try out their concepts.
So please, stop bashing the banks. Sure, move your money to a local credit union, that’s a supportable idea. But don’t forget we are the little guys. And while I know this sounds insane in today’s world (or really at any time) we ought to be grateful for the idea of banks, even if our own bank sucks. Let’s focus on making the banking system better, more sustainable, and demand that it puts its money into projects that will produce long term benefits. And for crying out loud, let’s do something about all these damn fees!