As banks go ‘bank’rupt, here’s something you can bank on!

(I have received many enquiries about a blog on the collapse of banks since I work closely with the investment banking community. But I felt that enough has been written on the topic that I chose to write on banks in general)

A banker is a fellow who lends you his umbrella when the sun is shining and wants it back the minute it begins to rain - Mark Twain

The impression of a banker, for me, was that of a risk-averse, pin-stripe suited guy. Well, if I were to consider the way banks are falling like nine pins on Wall Street (they are planning to rename it as Fall Street!), it is time I created exactly the opposite impression. I feel the phrase bankrupt has become ironic; shouldn’t bank mean ‘bank'rupt now? By the way, the safest bank these days seems to be the Piggy Bank. But I am not that worried about all these banks closing down. If the banks are closed, I just use the ATM.

Banks are intermediaries who take one person’s money (in the form of deposits) and lend to another (in the form of loans). Banks charge you high interest to borrow your neighbour’s money which you could have borrowed directly at much lesser interest rates, if you had not thrown stones at his dog or shouted at his children when they stole fruits from your garden. As per traditional theory there are three rules to become a successful banker - First, don't lend money to those who don't have any; second, don't lend money to those who need it; and third, don't lend your own money.

Lending is the main activity of banks, because that is how they make money. You have to prove to the bank to ‘its satisfaction’ that you would be able to repay the loan. Practically what it means is that you will have to prove that you actually don’t need the money. I never knew why banks called the loan I took a ‘personal loan’ till I missed couple of my payments. And boy, did they get personal! But you may want to be careful with those calendars banks give you to help you keep track of your payments; some have more than 12 months on them! A word of caution for borrowers - you may be turned down a loan if you are good friends with many collection agencies.

When I learned that I could borrow against assets, I approached my bank to lend me money to buy a car against my intellectual property and knowledge assets. And that is when I learned their true worth! Of course, my job also reminds me of it often. After influencing higher ups of my bank, they finally offered a loan of $10,000 to buy a car that was worth $20,000, after ensuring that I have income to repay a $100,000 loan, against the guarantee of two people who have assets worth $250,000 each. That is when I realized that there is more truth than humour in the joke “if I owed the bank $10,000, it is my problem; but if I owed the bank $1 million, then it is the bank's problem”.

Banks, like trees, have branches but no leaves grow on them. Before the internet revolution, a bank’s worth was directly proportional to the number of branches; but today it is proportional to the number of online frauds. As a kid whenever I asked for an expensive toy I was always told that money doesn’t grow on trees. But if money doesn't grow on trees then why do banks have branches?

A bank teller is the person who tells (tales) why he can’t do things that you expect him to do. But I found that most of the time tellers don’t tell much. Last time I tried to encash my cheque, the teller told me that I had forgotten to dot the "i" in Salil. I asked him, "Can't you do that for me?" The teller replied, "Sorry sir. It must be in the same handwriting." Another time the teller asked me to identify myself. I immediately looked into the mirror and confirmed that it was me who was at the bank. And the teller was satisfied! Also if bankers could count, why do they always have ten windows and two tellers?

Swiss banks, known for their privacy and safety, are where people hoard their ‘black’ money (see, I told you there is racism among the rich!). Woody Allen once remarked “If only God would give me some clear sign! Like making a large deposit in my name in a Swiss bank”. I wonder where the bankers store all the money, with the way it is multiplying exponentially across the world. That makes me want to start a Swiss bank. My readers are all welcome to invest their hard(ly)-earned money in it.

Luther George Simjian once asked for money from his friend through a window. This gave him the idea of creating a hole-in-the-wall machine that would allow customers to make financial transactions, which eventually led to the invention of ATM machine. But whenever I have tried to check my account balance at the ATM, instead of printing out the receipt, the machine laughs out loud, gives a message ‘Not worth wasting paper’ and ejects the card.

Call centers are inventions of banks to check if you really have a problem. If you can call 13 times and wait for 45 minutes each, listening to the bank’s vision and mission statements, before you get through to a human, who of course is not in a position to help you, then it could be that you have a problem. Else, you are person with a complaining nature. I am not saying that the customer service in my bank is bad, but when I went in the other day and asked the clerk to check my balance ... she leaned over and pushed me.

Science has been working for long to develop neutron bomb that destroys people and leaves buildings intact. However, banks beat them to it by inventing mortgages. There were 5-year rest loans, interest-only loans, 30-year loans, you name it. The way things were going, I was looking for the day when banks would start giving 100 year loans to buy a house.

Meanwhile my online bank seems to have gone offline… with my account!