Sunday, December 18, 2011

The End of Free Banking (Again)?

The vague and lengthy declaration that retail and investment banks need to be split at some point in the distant future is going to be announced tomorrow. Desperate cries of horror from the banking lobby will follow as they always do. The most usual horror story designed to bring fear to the masses is the idea that free banking would become a thing of the past.

It's a good threat but one that will only be pulled out as a very last resort. Oddly enough, its coming about would be a sign of victory for the public. Banking most profitable asset is their customer's inertia; The infinite number of "you're more likely to change ... than your bank." There's a reason for that and that's not seeing the bank suck money out of your account. Should they start making it visible, customers will notice and all the efforts banks have been forced to make to smooth the process of transferring current account supplier will begin to haunt them.

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