A secure place for our savings

21 February 2019

A secure place for our savings

It was precisely ten years last September that the American bank Lehman Brothers went bankrupt. The fall of this major bank heralded a world-wide economic crisis, the biggest since the 1930s. Lehman Brothers and many other banks had gambled with our money and lost. When as a result they fell into difficulties, they had to be rescued with billions in taxpayers' money. There was simply no alternative. To prevent this happening in the future, we need to establish a public bank where our savings and financial transactions would be 100% secure.

- By Mahir Alkaya

Neoliberal economists and politicians often say that the market 'must do its work', talk in terms of 'market discipline' when a firm goes bust, and see state interventions as 'market disturbance'. After the economic crisis, however, these market fanatics suddenly proposed radical state measures to rescue the banks: state guarantees, capital injections and even nationalisations were the order of the day. While ordinary people could no longer count on the government and had to handle ever more things themselves, the banks could expect a warm embrace from their neoliberal state. As a result billions were cut from public spending. The consequences of this are still being felt daily in, for example, education and health care. The banks get the gain, society the pain. And Finance Minister Wopke Hoekstra could say to the Dutch Parliament this week during a debate on the crisis that he could not rule out it happening again.

The parliamentary commission chaired by former SP Member of Parliament Jan de Wit concluded in the wake of the crisis that savings held by banks must be protected from risky commercial activities. Despite unanimous support in Parliament this has not happened, and commercial banks continue to this day to make billions in profits thanks to our savings. In recent weeks, three major Dutch banks, ING, Rabobank and ABN AMRO have announced that in 2018 they earned net profits of between €2.3- and €4.7 billion. As things stand, the shareholders take these profits, but if we don't do something we'll be presented with the bill in the next crisis. To prevent this, people who don't want to run any risk with a part of their savings should be able to place them risk-free in a public bank. This would offer an alternative to commercial banks, whereas now no alternative exists. Commercial banks would still be able to attract savings and make profits if they could win back people's confidence and offer them a fairer share of these gains. By in addition making it possible to make payments from, into and between public bank accounts, a basic service for savings and payments would be established, one which could exist alongside the present banking system. Commercial banks could then function as ordinary enterprises instead of vital semipublic institutions from which shareholders earn billions in profits. This unbundling would be a step in the direction of a system under which poorly performing banks could more easily go bankrupt, which would mean that next time around the crisis would not see the public saddled with the bill for their rescue.

Mahir Alkaya is an MP for the Dutch Socialist Party

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