The Financial Crisis of 2008 was a major crisis for all citizens in the UK who have bank accounts. Everybody in the UK lost £3,000 because of this which makes the Financial Crisis one of the most major of all time. Banks lent out loans to people that couldn’t afford to pay it back, so therefore lost money, and couldn’t pay the Bank of England the right amount for their accounts, which lead to a significant deficit of money which affected the economy greatly.
For my Financial Crisis Final Piece, I chose Idea 1. Idea 1 is to change how bankers get paid, so they would reward bankers for being safe rather than being rewarded for taking risks. I chose this idea because, in my opinion, this would be the solution and preventative to another potential financial crisis. I believe this idea should be enforced because bankers would be encouraged to be more safe with money, resulting with the people in the UK definitely feeling secure with their money.
Prior to 2008, bankers were paid a lot of money for the loans they gave out because the greater the risk they took, the greater reward they received. I think this shows a lot of greediness and lack of care for the economy, which is not how banking should be. Banking should be to nurture and grow our economy, not threaten it. This is why I think the way bankers are paid should change.
This idea would be challenging because a lot of people love to take risks. It’s business. They think that the more risks you take, the better business person you are, which is very appealing. In addition to this, the idea is very bold, as it would change the whole reason why bankers would be paid. A banker’s job is to make money, so they want to make as much of it as possible, so take many risks to achieve the best they can.
People who would benefit from this idea would be British Citizens with bank accounts, because like I mentioned earlier, they would feel more secure about their bank accounts. If the bankers were rewarded for being safe rather than being risky, they wouldn’t give large loans to people who may be unable to pay them back. Therefore, a Financial Crisis wouldn’t happen again, so everyone who holds a bank account in the UK would feel secure about their finance. Also, bankers would benefit from this, because if they were more safe with money, they would get paid a lot more! They would also get a lot of respect from their bosses, because they would earn the company money, and wouldn’t lose much by taking risks.
People who could miss out from this idea would be people who don’t have much money and are in desperate need of it to keep their business going, or even people who want to buy a house. If they wanted to take out a loan, they wouldn’t be able to because if their bank may consider them unreliable: how is anyone able to guarantee a repayment of a bank loan for a mortgage of around £150,000? This would result in people losing money, and maybe even have to rely on their council, benefits, or even could become homeless. It could also mean our economy worsens as well, because not enough is being invested into it to keep it afloat.
I think this idea is fair because it could prevent another possible financial crisis, so even if some people wouldn’t be able to take out a loan, if another financial crisis happens, then everyone would lose money. Therefore, it’s worse if everyone loses lots of money because of it.