OPINION

Revenge of the depositors

Yesterday morning the director of a bank, after outlining the dire effects of the lack of fluidity, reportedly told his staff to reject six out of every 10 applications for housing loans or credit cards and added, «At all costs, get more deposits, and give as much interest as we can stand.» He justified his suggestion by saying sadly, «These difficult times are when the depositors will have their revenge.» Fortunately for them, I might add, since for the past few years, bankers, seduced by the paltry interest rates (1 percent in the USA, 2 percent in the eurozone), were literally looting their customers’ deposits with interest rates that were less than half the inflation rate. But times change and divine vengeance is visited upon those who have no respect for their fellow man. To be more precise, when [former US Federal Reserve chief] Alan Greenspan flooded the market with cheap money, doing away with any checks, it upset the banking system by abandoning its traditional role of a business institution that collected deposits and then loaned them out. Cheap money turned investment banks into colossi with clay feet since they did not have their own money (in the form of deposits or own capital) but took out loans that they then loaned on to insolvent customers. These investment institutions, led by Lehman Brothers, either crashed or were bought out, while traditional banks with strong deposits have withstood the storm, albeit being buffeted by it. Here in Greece, our banks did not fall victim to toxic bonds, but depended on loans from other banks and ignored their own depositors, at least until about a year ago. Now they have gone to the other extreme and are competing for deposits, outdoing each other with interest rates, although they sometimes confuse customers with the small print. It is no coincidence that Hellenic Postbank has issued an account called «simple and honest,» which has been rewarded with an onslaught of 1.5 million depositors.