When one looks back to the origins of banking and compares it to modern times. You'll have realized how far we have come. Some of the changes and innovations have been for the better and others for the worse. I doubt that the ancient Mesopotamians ever envisioned such things as credit cards being "everywhere you want them to be". The stock market and the idea of the corporation as we have come to know it and loathe it, in some cases, would have probably also baffled the scholars of times past. We have gone from biblical stories of throwing the money changers out of the temple to welcoming them into our homes through the mailbox, computer, and television; with their promises to finance our future stability ringing loud and clear.
The origins of banking first lied with securing commodities that were seen as valuable and that could be used as payments for debts or taxes levied. Back then this commodity was grain and huge grain banks came into existence. Once the grain was secured, exchange would then take place by the issuing of receipts when transfers took place. Grain and other commodities were considered to be what we now think of as money which would come to take on different forms and meanings and evolve over time from society to society.
The Greek and Romans of the fourth century BC appeared to have shifted banking into high gear with their use of loans and currency exchange. Moneylenders would accept payment in one city and turn it into credit within another. This allowed people to not have to transport large amounts of coins back and forth. Of course back then as the use of loans and debt increased so did the backlash from the Christian Church which was against the charging of interest. After the fall of the Roman Empire this view gained more of a following which resulted in a cease in the practice of usury. After this ban took place these lending practices were taken up by people from other ethnic backgrounds which still allowed it to continue, thrive, and have an important function.
Am I espousing a point of view in which lending and charging interest is something bad? Hardly. Actually I think all of the innovations in banking, finance, and investing have moved us forward and have their places. I just feel they need to be regulated better. If there is one practice that remains from those years so very long ago. It is the fact that in order for banks to make a profit and operate they must charge interest on the money that they lend. We deposit our money into accounts for safe keeping which they then lend out to others and charge interest on it. Of course, we only see a small amount of that interest come back to us. Also, thanks to the Glass-Stegall Act of 1933 the FDIC insures up to $100,000 per depositor so that we don't loose our shirts.
Lending is still one of the pillars for any banking institution but as I have written about before; it has taken on a predatory and aggressive personality. As with any corporation in existence I feel that putting excessive profit making above all else is wrong. There are all sorts of loans and credit cards with varying interest rates that these banks sell that can drive you to the poor house. And banks are more hungry than ever to sell you a debt product even if you think you don't need it. Of course with deregulation through the Gramm-Leach-Bliley Act which President Clinton signed into law in 1999. Commercial banks now own brokerages and dabble with securities giving them more opportunities to turn a profit. Your old fashioned community savings bank is an endangered species.
The reason why I left banking, more directly, the reason I left being a bank teller at a Wachovia Bank in Westchester County, NY. Was because I hit a boiling point where I realized that this was not for me. They have turned every position in the branch into one that must sell and meet goals. The sales goals and profit maximization are put above the people no matter how much a "focus" on service scores via a Gallup poll tells them otherwise. Saying the customer's name and asking them if "there is anything else you can do to help them" after every single transaction does not build a community who will value your institution. That caring has to come naturally. When I was there my "flaw" was that I cared more about the people and helping them than I did about selling them something. The sales pressure was felt at the top by the management and it eventually trickled down to where we as the bank tellers felt it because the management was under duress. Of course I never saw banking as a career in the first place, but this only soured my taste on it. To be fair Wachovia isn't the only bank that operates like this. I'd be surprised if there wasn't a large national commercial bank who did not operate similarly.
But this brings me back to a previous statement I made and that is the coming extinction of your local community savings bank. Are they really lost to us? Besides a small amount of local savings banks that I read of now and then. I think that there is another entity that could function in a helpful role to bring about a new look towards banking. In the village of Hartsdale, NY next to our train station. I came across a sign in a vacant store window notifying the community of a new credit union that would be opening up. I visited their website where I found the following statement: "UniStar Federal Credit Union is a local financial institution with a big difference - we are owned by the people we serve. As a not-for-profit financial institution, UniStar's main goal is to satisfy the financial needs of its members, not to generate profits for shareholders. This means that all excess earnings are returned to credit union members in the form of lower interest rates on loans, higher yields on savings or new products and services."
They offer most of the services and products that are now synonymous with any commercial bank. You have consumer loans, savings and investment accounts, Internet banking, and a 24-hour telephone banking system. They continue to say "Our offices are conveniently located right in the heart of the community. UniStar has been honored and recognized time and time again for its commitment to the local community. Our partnerships with local school districts, colleges and a wide variety of social agencies has served to strengthen our core philosophy of "People helping People"--a value that defines and differentiates credit unions from other financial institutions nationwide." Looks like the alternative to the big banks are getting brighter everyday. Welcome to Westchester County, Unistar.
Sources cited:(http://www.ex.ac.uk/~RDavies/arian/origins.html), ((http://pages.citebite.com/e1d7k5j4a8mul), and (http://www.unistarfcu.org/)
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