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Banks told not to profiteer during coronavirus troubles

by LLB Reporter
30th Mar 20 2:12 pm

While you would like to think that we are all in the fight against coronavirus together, it seems that some members of government are becoming concerned that British companies don’t share the same sense of community.

While there is a historic stimulus being passed out; many companies are being warned against keeping the profits all for themselves.

The situation

The coronavirus has caused problems for individuals of all walks of life and has put many out of work. Without work, many people have been forced to turn to emergency loans and banks are putting out higher rates than some would prefer. They want to see giving along the lines of the Tej Kohli Foundation.

Barclays was targeted as a bank that is offering up to 10% interest rates on loans while the Bank of England sits at 0.1%. Obviously, there is some middle ground here and it makes you think that many would look for compromise.

That’s exactly what the government is asking for. They think a reasonable range would be anywhere below 6-7% and think that its reasonable for banks to want to limit their risk. However, the banks do have an obligation to act in a moral way as well.

It’s a part of the puzzle that is new in this strange world where we really don’t know what the conditions will be like for the ongoing future.

The banks’ risk

One point that is often brought up is the fact that many of these new loans would be enforced by the government so that banks really have no downside. When looked at in that scope, it’s a bit tougher to be on the banks’ side. Without much risk, offering rates at the higher end of the spectrum like they have been doing starts to look a lot like profiteering and much less like protecting themselves from any risks.

Many government officials have made the claim that any help needs to benefit the whole of the community. Of course, it does them no good to make laws that will only help the banks, as the millions of individuals are the ones who vote when election time comes around.

Other industries have already loosened restrictions meant to crack down on cooperation between businesses – however that has been in consumers’ favor. Any businesses working together for the public good would be tolerated. Any business’ trying to drive up prices in an industry would be punished severely.

Conclusion

It’s all a part of this new and interesting world where the old rules don’t always apply and the new rules can be hazy with a tough understanding of what is right and what is wrong.

One thing is for certain, if banks are going to try to profiteer off of individuals looking for emergency loans; it’s going to be a long path for them as the individual consumers have a lot of people watching out for them and trying to secure a fair path forward.

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