'The Credit Crunch' is one of those terms the media love to overuse. It contains no long words that would presumably confuse stupid people, and it condenses a wealth of detail and sophistication into one punchy alliteration. Like 'oil crisis' or 'war on terror', the term is almost meaningless to individuals; you feel the consequences in your pay packet, but there's a subliminal awareness that if it wasn't one thing, it would be another. 'It's just life.'
I have an alternative definition, though:
credit crunch noun: The means by which banks make everyone else pay for their mistakes.
Allow me to explain my bitterness. I have been running from credit for a long time. In 2002, a bank who I won't name as Barclays foreclosed on me. They'd been happy to string me a line of credit and offer me huge mortgages even though I was self-employed. Then, my contract ended and (in the IT crash that followed 9/11 and the dotcom burst) it took a while to find new work. They shut all my accounts, and sent demands for immediate payment. From Friends to The Sopranos overnight. After much effort I sorted out new work, and after a few years ended up with credit cards to pay off the more structured past debt for which Barclays were threatening. Debt leads to debt, and the mess still exists. The wound is still open and raw, years down the line.
I earn a good salary now, and my partner and I are trying to rationalise our debt exposure by getting a loan to pay off the credit cards. Her bank, with whom she has 25 years of almost flawless history, are absolutely, positively worse than fucking useless in this regard. Here's the cycle:
- We become a little over-exposed, due to the apparently bottomless pit of expenses that is IVF.
- We miss a few payments, incurring RBS' disgusting £38 fee every time.
- As a result of getting a few of these fees, the account ends up permanently on the edge of being overdrawn. More fees result.
- We attempt to break the cycle by restructuring our debts, in a responsible manner.
- RBS decline on the grounds that we were occasionally overdrawn, but not before wasting weeks of our time and allowing us to become overdrawn again.
I work for a bank, I understand well the pressure all banks are under at the moment. I also understand that at big banks, the pedants are in charge. Those at the branch, who know their customers, have no discretion. They'll take a person's business for quarter of a century, profit from them every day, and yet when it matters the human element means nothing at all. The underwriters, probably under the gun themselves, reduce peoples' lives to a number, and that number reduces all but those who don't actually need any credit to the inevitable refusal.
There has to be a better way. We, as customers, have to try harder to remember how our banks treat us when times are bad, and not grab so greedily at their 'generosity' when times are good. Behind the modern façade the banks are exactly what they've always been. They don't know you, they don't want to know you.
It's not about being a responsible lender, if it were we wouldn't be in the mess we're in. It's about fear: Fear from individuals of losing their jobs, and from companies afraid of losing it all. Even as a bank employee it's very hard to feel sorry for the banks. They richly deserve every ounce of the pain they're trying to pass on to us.
