The Bankers Achilles Heel

Billothewisp has been watching the unfolding farce surrounding bankers bonuses with probably as
much disbelief and disgust as the rest of you grubby little Englanders.

I suppose it really was too much to expect the arrogant ignorant and greedy to put anyone else before themselves. Even when we are all up to our bottom lips in their debt.

The bankers feel invincible. They can ignore the shrill cries about fair play and  responsibility. They can sneer at the common hard working folk while gloating over their own growing mountain of gold.

This travesty will continue year in, year out. Until, out of nowhere, "something" will happen that turns them from an arrogant elite into a flock of foolish redundant dinosaurs.

And maybe that "something" had already happened.

Maybe an event has already taken place that spells doom for out extremely well fed friends. Perhaps they have been so busy swindling the rest of us that they did not notice the high tide of banking excess has reached a turning point.

Revolutions, even against the most despicable tyrants, never happen unless there is someone, or something of a revolutionary nature that sparks the gunpowder.

Billothewisp reckons (or at least hopes)the today that spark has arrived and has the name of Peer to Peer banking.

Currently the most popular manifestation is a company called ZOPA but there other infant companies like Funding Circle. The concept has even expanded into the charity field with an organisation called KIVA.

Currently all of these companies simply deal with arranging and financing loans. But all revolutions have to start somewhere.

Peer to Peer banking works in a completely different way to normal banking.

With a bank you borrow off the bank. They decide the rate. You get what you are given. The money they take in from savers gathers derisory interest. The bankers pocket almost all the profit.

Companies like ZOPA work in a completely different way. They are an arranger. They do not own the loans, but they take a commission for sorting things out.

A loan for £500 will have 50 lenders, each lending £10. Each lender, lending in total £500 will lend £10 to 50 different borrowers. All borrowers are credit checked as for a normal loan, and the risk of bad debt is reduced by the spread of the lenders money over many borrowers.

The best part is that the interest rate is determined by what the lenders is prepared to lend it for - and what the borrower is prepared to pay. Hence the name ZOPA (Zone Of Possible Agreement). Borrowers pay less and lenders gain more. This would have been impossible before modern computers.

It is revolutionary. The cobwebbed ossified banks have no answer.

I hope it works.

I hope ZOPA, its clones and competitors continue to grow exponentially. I really hope the greedy banking elite come to rue the day the scorned and swindled the British public. Maybe with a real revolutionary alternative to the big banks we will avoid ever getting in this mess again.

I'm having a go with ZOPA (you want to try lending through them, you can start with £50.00), also Funding Circle and soon KIVA. It's worth a punt.

I'll tell you how it goes.


Dioclese said...

Franky, if I was offered a " million quid bonus, I'd say "Thanks" and then fuck off with it larfing all the way to the bank. I wouldn't bother to work after that.

Unfortunately these greedy bastards don't say thanks, still take it, and then come back for another one next year. The only similarity seems to be that neither of us would give a toss what anyone else thought about it!

ZopaSarah said...

Thanks for your kind wishes and comments - we hope your lending at Zopa, FC and Kiva are rewarding, in more ways than one!