The banks in Israel are largely responsible for the poverty in the country.
Because there is no protection of renters, many people work all their lives to own a house. The banks who “give” the mortgage, through a series of tricks, make the lenders pay trice the price of would you would pay if you would save first and then buy. The typical Israeli family consists of two grownups (and a slew of kids), one working for the cost of living and the other for paying off the mortgage. The “loans” to buy a house are risk-free for the banks. They will cover only two-thirds or so of the value. The rest you need to cough up yourself. And if you paid off 90% and want to quit, the bank will say: well, that was all interest that you paid but on the value of the house you haven’t paid anything, the house is ours, thank you. This is all legal and normal. On top of this, housing prices are needlessly high which drives up rent prices too. A small percentage of rich people keeps the rest of the population dirt-poor and feels good about it. How to get a small fortune in Israel? Come with a large one.
A new bank is in the planning, for the first time in Israel in 40 years. Two super-rich guys are going to establish it without any physical branches. A virtual bank. Because of that, it’s likely to give better financial deals and force the other banks to close their branches too. It’s called progress.
The hype, even in the supposedly leftist Haaretz, is that this would enlarge competition which according to capitalist theory is good because it would lower prices. However, it’s really just a ploy to reorganize bank tellers and other branch workers out of existence (mass firings), leaving customers at the mercy of computers.
So, really, what was announced is a new bank that will plunder us in the old ways and on top of it will give us less service and spread mass firings..
How great it would be to see banks whose goal would be to give service to the public, not to milk it dry. That would be new banks. They would still make money but only on the side. Yet, I don’t hear anyone suggest this. It also seems way too “radical” for Israel’s public-friendly finance minister. I only had written this and the news announced this!
In the US there seems to be one presidential candidate, Yang, smart, thinking outside of the box and humane enough to start that. But he has a long way to go before becoming America’s number one. If he gets there, I’m sure Israel will follow swiftly. Meanwhile, we live under classical capitalism and don’t hold your breath.