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Catch 22: When Judges Side With Bankers

November 28, 2009

Supreme Court Thomas Mathew writes: Pardon me for asking, but do you think the members of Britain’s Supreme Court knew that what they were doing was wrong when they ruled, unanimously, this week in favour of the banks imposing extortionate charges on people who have current accounts with them?

Hmm, that’s a tough one, eh? A catch 22 situation. Especially considering that all the previous courts in this case ruled in favour of the Office of Fair Trading (OFT) that represented the interests of millions customers who were trying to get their money back from the banks. So that you know, the Supreme Court has ruled that the OFT had no legal right to question the banks’ levies, which was the same as taking the side of the money men.

It’s good to be in banking in Britain. You win under any circumstances. You make money, you keep it. You screw up, you get bailed out. You get taken to court, the court rules in your favour. You receive huge injections of public money to pass it to industry, you use it instead to pay yourself huge bonuses.

Prior to the creation of the Supreme Court and the ratification of the treaty of Lisbon the final appeal of the banks would have been heard by the Lord Lords sitting in the House of Lords, and I have no doubt that the Lords would have upheld the previous rulings against the money men. As what they do imposing excessive charges on people struggling to stay afloat is unfair and even smacks of loan sharking. Banking itself, it has to be said, has become something of a dodgy industry run by people who have no understanding of what trust and ethics are about. Just think about it: in the past several years banks in Britain have made £10 billion on penalty charges. What on earth does it have to do with offering financial services?

The whole financial crisis has demonstrated that banking has nothing to do with proper investment. It is all about lending money at extortionate rates and then packaging and repackaging the debt over and over again. And once it all goes wrong, the taxpayers are forced to step in and bail out the money men, who are at it the moment they have some spare cash to gamble with.

What I find most remarkable about the whole court case concerning the excessive penalty charges is that it was not the Financial Services Authority, the Banking Commission or the Bank of England that have raised the issue but the Office of Fair Trading that is usually involved in investigating trading companies. The regulators, it seems, had other things on their mind instead of doing their job.

Mark my words, now that the banks have been given a licence to rip off their customers with huge penalty charges on the current accounts that is exactly what they will do: rip them off. That is what they are mostly good at.

In 1994 the High Court handed down a judgment that there is equity in the rate interest and equity in the calculated and/or uncalculated rate of interest. The banks accepted that, as a result of this ruling, the money kept in current accounts was held by them as ‘constructive trustees’ and that in order for them not to be accused of breaching that trust they had to pay at least some interest on their current accounts. Yet, since the credit crunch set in the banks have stopped paying the interest. The law was clearly defined in that there is equity in interest and it was not so long ago that people in authority could be relied upon to adhere to and uphold the law. Not any longer.

We now know that even the Bank of England is acting as a piggy bank for the money men, lending them huge funds at low interest without bothering to inform anyone about it. Mervyn King, the current Governor of the BoE, has revealed recently that he had taken on his authority last year to secretly lend two failing banks, the Royal Bank of Scotland and Halifax Bank of Scotland, a staggering £60 billion, to prevent them from going into administration after the government had taken them over. This is the sort of thing that usually happens in communist countries. But it has now become the reality of the banking world in good old Britain.

What next: legalised loan sharking?

– End –

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