Frank Talk On Bank Squawk

The North American banking collective is an ingenious marketeer.  Its members have spent the last generation offering cozy little advertising campaigns featuring toothy, neatly coiffed individuals thoroughly enjoying their banking experience. Those who greet us behind desks and counters at banks now often look like us, dress like us, and act like us.  The banks have done an A+ job at convincing us that they are our friends.

How else could you explain the palpable outrage expressed when some banks recently raised service fees by a few dollars/month?  Friends don't screw over friends this way, hence the squawking.   When insurance companies increase rates by much more significant amounts, there isn't a reflex to publicly condemn them.  The difference of course is conventional wisdom dictates that insurance companies are scoundrelly scum who won't pass up an opportunity to bend us over.  We expect this from those who are not our friends unlike the swell folks down at the bank.

The simple truth is, clever marketing aside, the banks are not our friends.  They are in the money lending and subsequent interest levying business.  Most of use will, at one time or another, require funds from a bank.  The most common requirement would be a mortgage to purchase a home or other property.  As long as we jump through a few hoops, the bank will be more than happy to oblige.  Of course, for every dollar we borrow from the bank, something greater than a dollar is owed back.   If ever there was a simpler business model, I've yet to hear it. What's even more brilliant is that the money the banks lend to us is, you guessed it, our money that they hold as account deposits.

It's fruitless to fret about how the banks conduct their business.  They are heavily regulated in this part of the world.  But your uncle, your neighbor and I can participate in these phenomenal businesses simply by owning them.  No, you can't start a bank, but most of them (and all of the good ones) are public companies meaning almost anyone can own a share of them.  In any 10-year period over the last century the average annualized return on North American banks has been greater than 14%.  It's hard not to be impressed and that rate sure beats the snot out of the near-zero return you get by being the banks' customer, rather than a shareholder, doesn't it?  Perhaps the most sublime aspect of the banking business is that you and I can own a piece.

So give up complaining about alleged corporate misconduct, rallying against the new 60-story glass tower, or protesting about a $5 service fee increase.  Raging against the machine gets you nowhere.  If you can't beat 'em, own 'em.