Interesting.

Since you love analogies, here’s one for you : A healthy young person wants to buy a dozen bottles of the strongest cough medicine… It’s good for business if the chemist sells it, but I think we’ll all agree that professional ethics requires them to check whether the purchase is legitimate, because there’s a health risk associated.

A businessman goes to a banker to borrow money, to import “certain substances” from SE Asia… so the banker charges him a fat interest rate to cover the risk, and business is business eh?

You may object that this is a matter of legality rather than ethics. Well how about this : the businessman wants the money to clear fell tropical forests in SE Asia and sell the timber. All perfectly legal, let’s say.

According to you, no problem hey?

According to me : It’s up to society to fix the ethical framework in which business takes place. Others have pointed out that NZ bankers are trailing behind public opinion on ethical questions. It’s time for consumers to demand transparency, apply pressure, and exercise discrimination in choosing their banking institutions.

The bankers will fall into line. As a matter of good business.

what i was saying was that mainstream banks are much alike. they offer pretty much the same product - underpinned by mortgage lending. making improvement on “business as usual” in carbon terms is where they can lead (albeit incrementally).

using the w’pac eg, by offering a whole lot of “green supplier” vouchers they’re helping ensure that the spend is more carbon responsible than the next.

remember the anz ads on telle? the dude busking for “extra cash” in his mortgage? anz give borrowers a kitty to spend freely - carbon is not an issue for anz.

in that scenario bnz are being more carbon responsible than anz.

thats all
mike

I think you’ve just exposed the flaw in your own argument. Shonky south auckland finance companies are not entirely “another story” they are just a slightly more extreme end of the same spectrum.

It is not only south auckjland car finance firms that go bust from over-extending credit to underperfoming borrowers. Witness the whole US sub-prime mortgage market and the impacts that is starting to have on their supposedly more robust sources of capital.

Witness also the lending frenzy in the mid-80s here in NZ when banks started lowering their own prudential risk standards so as not to miss out on the credit boom of the time - and witness what happened when the chickens came home to roost from that behaviour - namely a government bailout for the BNZ.

Banks are not a special (or more moral) case, they simply have larger balance sheets and larger capital bases. Over the last 200 years in western economies banks have shown themselves to be as prone to failure as most other financial organisations - and as prone to over extending credit to borrowers unable to afford repayments.

This doesn’t mean that the banks will necessarily dip out - that’s what loan security is for. The borrower may well lose their house and other assets, the bank will just face some collection costs. But if it gets taken too far it can hardly be seen as moral business practise.

And yes, many people do need protection from sharp financial practises that they don’t understand. This doesn’t mean that they’re stupid, just that they may be a little too trusting because they’re used to dealing with people that are trustworthy.

Neither the Commerce Commisssion nor the Consumer magazine were established to protect stupid people from themselves - but to protect honest people from dishonest, deceitful and manipulative ones.

The point mikey seems to be making is that banks should encourage only sensible levels of debt that profit them, their customers, and society in general, instead of large amounts of debt that profit only the bank. You borrow to make an investment, especially if you have capital you don’t mind risking for that investment. You *don’t* encourage people to borrow beyond their means, and especially not borrowing to the point where they don’t have a realistic chance of paying off the interest.

And analogy is not a “blog debating trick”, it’s one of the fundamentals of arguement.

That was a nice refreshing read - lot of good sense contributed to that discussion.

Re you link above to often quoted survey my understanding is that’s based on their product range and performance in Australia - which is rather good, but unfortunately bears very little resemblance to their performance or their range of prodcuts in this field here in NZ.

It’s surpising the number of financial organisations who are active in the ethical/sustainability space overseas yet show no or very few signs of that as part of threir policy or priorities in their NZ operations.

Westpac is one, Mercers is too (re that earlier thread Mike linked to above) and Rabobank is another. Raises questions abpout the sincerity of their commitment to those objectives in their other spheres of operation - perhaps its all just driven by market demand after all and we Kiwis just aren’t interested enough so we’re not getting the offer.

So you don’t ascribe to the view that too much debt can be bad for your health? or personal finance stress levels?

One of the things I really liked about the Credit Union movement when it kicked off was that it’s prime focus was on encouraging good savings and financial management habits of their lower income members as much as it was about financing new consumer goods, cars or hoildays.

I’m not sure that they all still have that balance in mind when encouraging members to borrow for the things they want rather than save toward them.

Mike, I remember that discussion as being a good one - thanks for the links, I’ll go back and refresh my memory a bit more.

Cheers.

> Doh, Banks make money out of selling debt. You know the difference between what they pay and what they charge is called gross profit. Its how they pay all the wages to the thousands of NZers they employ. Why should a business not encourage its staff to sell more of the product that makes them money?

My pharmacist makes money by selling medicine. Would it be appropriate for him to try and encourage everyone to take as much medicine as well, even if it made their health worse, just so he could make more profit?

The Australian government exports uranium. Should they aggressively try to sell as much uranium as possible to everyone who might be thinking of building a nuclear bomb, just because this would make them more money?

It’s not always ethical to do everything you can to increase profits.