As I’ve said in the past, the banking industry would screw every if the tables were turned in this credit crisis fiasco and behold, they are. Governments have been much too easy on this bunch as trillions are handed over with few questions and few strings attached. So how do the banks react? Predictably. This may be from the UK but I have a hard time believing the same is not happening elsewhere.
High-street banks are continuing to hit businesses with punitive interest rates for loans and overdrafts and are resorting to more severe measures to ensure they are paid.
Some are demanding that owners of small businesses put up personal assets as collateral in return for a business loan. Others are changing conditions of loans by sending emails rather than meeting in person, and giving borrowers just 48 hours to comply with unilaterally-rearranged overdraft and lending agreements.
The Business Secretary, Lord Mandelson, said he was alarmed by the banks’ behaviour: “That is not the sort of constructive relationship that is sustainable between banks and businesses.
“I want a constructive relationship with them, of course, but they have to know they are going to be tested and judged by what role they play to help Britain and British business get through this economic storm.”
The Prime Minister, Gordon Brown, also heaped the pressure on misbehaving banks. “There is a loss of confidence in the banking system and they are increasing that loss of confidence by not acting the way banks usually do,” he wrote in a Sunday newspaper.
Oh there’s a lack of confidence alright.