I am writing this letter in response to recently published article on increasing bank mergers titled ‘Concentration of Banking and Increasing Parasitism’. Today banks have become an integrated part of our lives to the extent that of our many day to day financial transactions involve banking. While most of us are using it we never realize the enormous profit pocketed by the banks in this process. Many of us would know that the difference in the interest rates offered on savings versus that charged on lending is the source of profit for banks. But the amount of profit earned due to non-interest income which accounted for 30% to 40% of the total income earned by commercial banks in the past 10 years goes unnoticed. It was revealing to read that as banks become bigger and grow into monopolies, an increasing share of their profits comes from non-interest income.
As explained in the article there is an increasing trend to lure people into investing in mutual funds. It is presented as a lucrative investment plan for a short period of time and large profits are promised. But in reality it is an attempt by the banks to extract even the smallest portion of people’s savings and invest them into “risky” investments in the want of earning huge profits. It is the hard earned money of the people that is put at stake while many of the investors are unaware of the actual “risks” involved. Similarly, loans are also increasingly proposed for anything and everything that people wish to buy these days. The article explains this point with great clarity that the huge interests charged in these loans is actually a form of robbery. This form of profit earned by the bank is not due to any productive activity but in fact direct robbery of people’s money.
What was very astonishing to understand was the burden of banks profit that is again borne by the people when a bank lends to the government. The interest paid on such loans is paid from the tax payers’ money and increasing burden of the debt on government means increasing burden on the people in the form of taxes. We can see the various forms adopted by banks to loot the people and earn unprecedented amounts of profit and that the states protects the profit making interests of the entire banking sector.
The recent articles on merger of banks established that the mergers are aimed at privatization and monopolization in the banking sector. This article explains the parasitic nature of a monopoly banking sector. Together, we get a clear picture that the entire banking sector is moving in a direction to loot the people and rob them off their savings. The profit earning interests of the banks have to be exposed and people have to oppose the privatization and monopolization of the banking sector.