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Banking in a recession

The recent publicised report stating that intrest rates will stay at 0.5% until 2011 and will remain below 2.0% until 2014 suggests that recovery from this recession will be longer than expected. In terms of the banks attitude to risk and lending I think we can see a protracted inflexible and cautious stance on lending for many years to come.

It is easy to blame the banks for the mess we are in but personally I think we as individuals are all as much to blame as is the government. The banks are indeed  to blame for their lax lending policies of recent years. As a finance broker we saw many business finance deals agreed by the banks at very low interest rates  and at amounts which in our opinion were too high for the businesses concerned. The banks had lost sight that lending money is a risk reward business. As individuals we are to blame for our materialistic and must have now and pay later attitude. Is it correct that the average house hold has over £20k of credit card debt? No wonder there ae so many personal bankruptcies at the moment. And the government must be partially to blame for not regulating the whole thing in the first place.e

The bottom line is the banks have had their fingers burnt. They ain’t suddenly going to start landing like the good old days. Thankfully there are many independent finance companies willing and able to add value and help where the banks cannot.

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