Submitted by Terence Blackett
How Unlawful Bank Charges, Variable & Adjustable Interest Rates and the Practices of Corporate Bigotry and Institutional Prejudices Affect Black Businesses and Individuals?
A banker is a fellow who lends you his umbrella when the sun is shining but wants it back the minute it rains – Mark Twain
Virtually all countries in the world operate on what is called the Private Debt Money System (PDMS) and what that basically means is that institutions like the (Bank of England & Federal Reserve) can just create money out of thin air. The money is then lent to commercial banks who in turn lend it to you and me at sometime extortionate rates of interest.
Sir Josiah Stamp (1920) then president and director of the Bank of England aptly said that: “The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in iniquity and born in sin. Bankers own the earth. Take it away from them, but leave them the power to create money and control credit, and with the flick of a pen, they will create enough money to buy it back again. Take this great power away from the bankers and all the great fortunes like mine will disappear, and they ought to disappear, for this would be a better and happier world to live in. But if you want to continue to be the slaves of bankers and pay the cost of your own slavery, let them continue to create money and to control credit.”
With [6] commercial banks in Barbados, [54] offshore banks and [14] licensed Trusts, Finance and Merchant banks – last year alone, commercial banks made over $50 million from consumers (which equates to $185.00 for every man, woman and child in Barbados) for everything from investment interest on deposits, bounced/returned cheques, exceeding overdraft limits and fees incurred, also insufficient funds / negative balance charges – all of these “red-ink” entries fuelling their number one source of income.
In 2007 while in Barbados, a business colleague who owns a major construction firm was having problems with his bank, First Caribbean, and asked me to write several letters on his behalf to those specific members of the institution with fiduciary responsibility for overseeing the legalities pertaining to corporate accounts.
After several hard-hitting pieces of correspondence, utilizing the penchant of the bank’s legal and contractual obligations to address my colleague’s concerns – we were granted an audience in their corporate offices in Rendezvous to discuss the matter. The bank finally conceded, settled and ameliorated to my colleague’s amazement.
Today banks in Barbados are still playing on people’s ignorance of the law and at the same time, a lack of transparency, non-disclosure and external accountability only adds to the perpetuation of the status quo.
A recent article in the Advocate Newspaper by Stephen Alleyne only helps to highlight the quagmire that Black business people as well as individuals encounter as they seek redress to basic idiosyncratic problems created by banks who are frankly a law on to themselves. The bank’s procedural processes in regard to follow-up are truly pathetic. Business people and individuals suffer undue embarrassment, no explanations whatsoever for stupid cock-ups relating to unauthorized movement of monies from accounts and on the other hand, refusal to move monies from savings accounts to business accounts to offset payment of cheques to clients and suppliers which results in returned cheques (though authorized) incurring penalty charges to the individual or business.
It is not to say that monies are not available even when the bank has a signed letter authorizing transfer of funds when needed to supplement additional payments to existing business accounts (but certain White owned businesses receive preferential treatment in this regard). Regrettably, there is never any acknowledgment, apology or a remonstration from the bank in regards to its corporate inefficiencies, the lax way bank officers approach their jobs and its functions but more so the management’s lack lustre approach to genuine customer complaints and even an acceptable way of curtailing future episodes.
My Australian colleague, friend and “freedom fighter” Jim Wilson drew my attention to the fact that banks who charge “variable interest rate loan contracts are invalid under Common Law”, which means in principle that for all those with adjustable rate mortgages, the bank can fluctuate your rate “willy-nilly” depending on how the wind is blowing in the marketplace and in the Common Law it is a violation based on “informed consent” rendering the contract fraudulent in Mr. Wilson’s words.
Another area of concern is the issue of unfair bank charges – these tariffs are in principle “Penalty Charges” which are irrecoverable at Common Law. The precedent for this was Dunlop Pneumatic Tyre Company Ltd v New Garage and Motor Company Ltd.[1915] AC79, along with Murray v Leisure Play [2005] EWCA Civ 963. It was held that a contractual party can only recover damages for an actual loss or liquidated losses. It is clear that these charges do not reflect any actual and/or real loss.
In the UK, under the terms of the Administration of Justice Act 1970, when a debtor has reasonable grounds to put an account into dispute, a creditor has to freeze all action on the account until such time that the dispute is resolved.
The Office of Fair Trading in London has looked at the way banks in the UK charge customers for their current account pricing, alongside a formal investigation into the fairness of charges for unauthorised overdrafts and returned items. The study did help the OFT to consider the current levels and incidences of the charges in the broader context of efficiency, transparency, value and consumer choice within personal current accounts. This has been the most wide-ranging study into personal banking to date – something the government of Barbados need to SERIOUSLY* address.
The law is plain: any charges banks levy on their customers must be proportional to the actual costs they incur. The simple question is – does it really cost £35 to send an automated letter when someone’s gone 1p over the limit or for a bounced cheque which actually cost ONLY £2 to service as in the case of Barbados the cost is $60 when the actually cost to service that cheque is mere $5.
Banks in Barbados have been getting away with bureaucratic highway robbery for years – exploiting Black folks through monetary mechanisms which in some quarters borders on fraud. The looming crisis on the horizon is when suddenly out of thin air, inflation results in skyrocketing interest rates which will take most people’s variable or adjustable mortgages from 8% (which is frankly too high giving international interest rates stand at 0.5%) to double-digits which will push most monthly loans repayments beyond the reach of families who are already struggling to keep up their payments.
It cannot be ignored that class and colour contradictions still exist within the sphere of the banking system today in Barbados. According to Franz Fanon, “You are rich because you are white; you are white because you are rich. [1966] “We must recognize that ever since emancipation ‘Blacks’ have occupied the lowest positions of any biological group in the societies of the British Caribbean; and although there is no clearly drawn race or caste line in these areas, prominence and prestige, wealth and power, have historically been distributed in terms of light pigmentation.” [Smith, 1960]
So C.O.W. Williams et al will be treated with much greater sobriety than the [90] odd percentage of the population who are stigmatized because of entrenched socialization and values etched on our psyches eons ago by the whip of the “massa”.
Making sense of the duelling paradigms of money and exploitation is still a public policy debate even in the 21st century but in the words of Albert Jay Nock, “there are two methods, or means and only two, whereby man’s needs and desires can be satisfied. One is the production and exchange of wealth; this is the economic means. The other is the uncompensated appropriation of wealth produced by others; this is the political means.”
The blogmaster invites you to join the discussion.