Reasons and Ideas for Banks

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Intro

This post will be about what I learnt this week in my BNC club, rotating around three main ideas. They would be the ideas which I have reasons for and against and questions which associate with them. The ideas are about what the Banks could do or change. The three ideas are:

Safer Lending, Stricter Rules and Rewards and Bonuses.

The Activity

We hadn't activity where put on three pieces of paper which had on them the ideas of: Safer Lending, Stricter Rules and Rewards and Bonuses. We were then asked a few questions and then to stand by one of the pieces of papers (which had been in three different places around the class) due to your answer.

Which Do You Understand the Least?

When this question was asked I stood next to the paper which had said Stricter Rules. I couldn't understand why you people wanted The Bank of England to give stricter rules after they'd learnt their lesson in the Financial Crisis! It was then explained to me and another person with me that Stricter Rules were needed as in the Financial Crisis, The Government hadn't been very strict and therefore Banks made bad decisions. I guess people didn't want the same to happen with The Bank of England.

Which Do You Think Is the Best Idea?

I'd thought that Safer Lending was the best idea because...

There wouldn't be ANY risks being taken and there's more of a chance you earn more money as risks could make you lose and gain money. Being safe will only gain.

The Financial Crisis was partly caused as people couldn't pay back their loans. Safer Lending would mean the Banks would only lend to those who they KNOW can pay back. This is a way to avoid another Financial Crisis.

Stricter Rules would mean less people would be likely to visit that Bank as the rules might be too strict and the Bank could go Bankrupt. Safer Lending would guarantee more people as they wouldn't want to have money business with a Bank which would take lots of risks or way too many rules!

Extra Question

Which Do You Think Is The Least Fair Idea?

I'd say that the least fair idea to be Rewards and Bonuses because not everyone would get an award and they might feel they're not favoured enough. This might make people feel upset or unwanted. Nobody would want that to happen at all! This can happen with children at schools as sometimes not everyone is a winner. People sometimes think this is due to favouritism or 'not being the teacher's pet'. In the subject of this post it would be not being the Boss of The Bank's favourite. We wouldn't the same problem for children to happen with adult.

Concluding...

I hope you enjoyed !this post and that you come up with some reason for your own ideas!

Comments (19)

  • Olivia-Avatar.jpg Olivia @ the BNC
    2 weeks ago

    It's great to see you reflecting on the activity in your session! Doing this requires all five Burnet News Club skills so you have been awarded a star - well done!

    It would be great for everyone to post in the comments section here with what they chose in the activity and their reasons why. There will also be skills on offer for scepticism, if you can challenge someone else's answer and explain why you're not sure about it!

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  • Ormiston-Bushfield-logo-250x250.jpg trusting_politics
    Ormiston Bushfield Academy2 weeks ago

    Personally I think that the Bank of England should make some more rules. But I think that so many people forget that it was a global crisis. This means that even if the Bank of England where to have had stricter rules than you could argue that England would have still been affected.

    You chose safer lending which you thought was the best. I do not agree with you ; I would have chosen rewards and bonuses. You said that being safe will only gain. If you where to play Monopoly if you never took risks (buying properties which people might land on) then you would land on people's property and then have to pay them and then you would not gain but lose money. I know that this could be a bit extreme but the point that I am trying to make is that if you never take risks then you might not always gain.

    Afterwards you said “The Financial Crisis was partly caused as people couldn't pay back their loans. Safer Lending would mean the Banks would only lend to those who they KNOW can pay back. This is a way to avoid another Financial Crisis.” I do not agree with you because if for example a 20 year old person went to ask for a loan of 8,000 pounds to buy a car and the banks looked at his salary and work and he was doing a poorly paid apprenticeship then it would not be accurate because he might get a better paid job or just leave the job in the future. My point is that even if they did look at a person's job they still can not predict the future.

    Finally, earlier I said that I would have chosen rewards and bonuses. I would chose this because it would encourage people to pay back their loan quicker because then they would get a reward. This would also mean the banks could give more people loans. But everybody would get a reward when they payed back back a loan and then nobody would be left out but have more money than they started with. Plus banks would be in credit because if more people had loans and payed them back the money back then more people could get loans.

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  • Olivia-Avatar.jpg Olivia @ the BNC
    2 weeks ago in reply to trusting_politics's comment

    Well done for being sceptical here and challenging what you have read. Can anyone provide a counter argument?

    Reply to this comment
  • St-Josephs-Northfleet-logo-250x250.jpg crafty_panda_bear
    St Joseph's Catholic Primary School, Northfleet2 weeks ago

    I personally think it would be safer lending because:
    1. There would be a a very little chance of there being another Financial Crisis.
    2. Banks are safer and have enough money to keep themselves running.
    3. It would be better security wise because they would know who they are loaning to and their background with money.
    But finally to conclude, I disagree with you because if it was safer lending it would bring it down to around an estimate of a 36% chance of there being another Financial Crisis. I understand your point though and the places you are coming from this made me think about my decision about who I chose and what side I was on and what side I was not.

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  • St-Josephs-Northfleet-logo-250x250.jpg crafty_panda_bear
    St Joseph's Catholic Primary School, Northfleet2 weeks ago

    I read it a bit wrong sorry I apologize I agree with you with safer lending.

    Reply to this comment
  • Graveney-logo-250x250.jpg beloved_chocolate
    Graveney School2 weeks ago

    You said that you think that the Rewards and bonuses scheme is the least fair. I agree with you, however you said that it was unfair because other bankers might feel left out if they did not get a bonus, but I think that it is unfair in a different way.

    We also did this exercise, and one of the ideas stated that bankers, instead of getting rewards for making money for their bank, they should receive extra pay for keeping money safe and secure. This is a good idea, but I think that bankers are already paid a lot, which is enough and should not be paid loads more. Bankers' jobs are to keep money safe, so why should they be paid extra for something they should already be doing. Others may argue that if you do not give bonuses to those who do their job well, then nobody will strive to do well in their job. However, their is another way to keep people wanting to do well: if, instead of not receiving bonuses if they do not try hard to keep money safe, they will only get a percentage of their salary, such as 90% if they risk lots. This would mean that they would be more inclined to work harder to earn more money. Then, more money could be transferred to the government to give to schools and hospitals more, instead of being wasted on bankers.

    However, they may still be the problem that you mentioned. If people were getting paid less, but not others, they may feel that it is unfair that they are getting less pay and other bankers aren't. This could make them angry, so they do not work hard, meaning that they get paid less, and get angrier, etc., etc.

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  • Millbank-logo-250x250.jpg allowing_singer
    Millbank Academy2 weeks ago in reply to trusting_politics's comment

    In my opinion I don’t agree because going on other people’s properties is not the right way. Imagine people sneaking into your bank accounts. People have to stop this. It is not fair for other people.please

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  • Ormiston-Bushfield-logo-250x250.jpg persuasive_moth
    Ormiston Bushfield Academy2 weeks ago

    A few weeks ago, we had a discussion in our group about whether it was better to take risks or play it safe.

    We all said that it was better to take risks only because if something was to go wrong you learn from it and know next time how to avoid it while playing it safe you will never learn. So from the second question you were asked 'Which do you think is the best idea?' you thought Safer Lending was the best idea and I do agree with this but you said 'There wouldn't be ANY risks being taken and there's more of a chance you earn more money as risks could make you lose and gain money. Being safe will only gain.' I think there would still be risks with this safer lending idea because it's a new idea which people would be taking a risk in trusting. I don't think there would be anymore of a chance to gain money than there is now but you are right when you say taking risks might make you lose and gain money but that's the point.

    The Stricter Rules being put in place would make a bit of sense though because even if people didn't agree with it, all the government is just trying to make sure that the financial crisis doesn't happen again. It would probably end up being put into most of the banks and so people can't avoid it, there only option would to either stick with these rules or risk losing your money. Personally I don't know what I would do. What would you do?


    Going back to you saying the Safer Lending was the best idea. You said that 'The Financial Crisis was partly caused as people couldn't pay back their loans. Safer Lending would mean the Banks would only lend to those who they KNOW can pay back.' say I wanted to buy a house and needed to take out £250,000 but when they looked at my work salary or maybe see what type of money I had at the moment and barely had anything, how would they know if I could pay it back? How do they know if am working towards or getting a new job? All I'm saying is there must be other ways to tell if people would be able to pay back there loan.

    Finally, I would put them like this. You said 'I'd say that the least fair idea to be Rewards and Bonuses because not everyone would get an award and they might feel they're not favoured enough. This might make people feel upset or unwanted.' I wouldn't count this as least fair because the rewards would be for those working hard and after awhile if people really want them others will start working hard meaning you would have a hard working bank. You said that the one you understood the least was the Strict Rules but I don't really understand the Safer Lending. I only don't understand because I can't think of a way they would do this without upsetting people. It would be nice to see how people would do it though. You said the Rewards and Bonuses were least fair but I don't see any as the least fair because in there own way they are making the business better and helping to stop the financial crisis from happening. That's just what I think though.

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  • Tiff-Avatar.jpg Tiff @ the BNC
    2 weeks ago in reply to beloved_chocolate's comment

    We've given this a star because you've thought about a way to motivate bankers to make good choices.

    When you say "more money could be transferred to the government to give to schools and hospitals more, instead of being wasted on bankers" do you mean from banks? Banks are businesses who make their own money. So any extra money they make they keep for profit.

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  • Tiff-Avatar.jpg Tiff @ the BNC
    2 weeks ago in reply to persuasive_moth's comment

    Well done for challenging information and giving reasoning for doing so.

    What ideas do people have for safer lending that if fair to everyone?
    What other ways could a bank feel confident someone would be able to pay back a loan. For example, what about if the government and banks worked together?

    Reply to this comment
  • Graveney-logo-250x250.jpg beloved_chocolate
    Graveney School2 weeks ago in reply to Tiff @ the BNC's comment

    Oh, thanks for this piece of information. I was thinking that the Bank of England could make a rule that banks had to give a percentage of their profit from reducing salaries to the government to use for a good purpose.

    Reply to this comment
  • St-Josephs-Northfleet-logo-250x250.jpg energetic_conversation
    St Joseph's Catholic Primary School, Northfleet2 weeks ago in reply to trusting_politics's comment

    I don't understand your second point where you explained your idea using the example of Monopoly. You started of as being the person who buys a property and then you suddenly were the person landing on the property and you finished of saying you don't gain but you lose money! So I assume you said that if you don't risk your money by buying properties which people might/might not land on you never gain. I will use your own example of Monopoly AGAINST your point. Every time you go round the board you collect money-£100 to be exact-I've played Monopoly against a few other people and ONE was a person who didn't buy or risk ANYTHING. They Played safe. And in the end THEY had MORE money than ME (who'd taken a lot of failed risks). If the banks played safe they still earn money, but just not as much if you risk a lot of money and luck is on your side. There is also an even chance that luck ISN'T on your side and you then LOSE a lot of money. Putting into a few numbers there's a 50/50 chance of winning OR losing money. So it's not necessarily a fantastic idea to take risks over playing safe.

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  • St-Josephs-Northfleet-logo-250x250.jpg energetic_conversation
    St Joseph's Catholic Primary School, Northfleet2 weeks ago in reply to trusting_politics's comment

    I don't agree with you third point/paragraph where you used the example of the 20 year old man. You said the man might not be able to loan as he has a poorly payed job. He may have a better job in the future but OF COURSE the bank wouldn't loan £8,000 to him if he has that job at the moment. You talk about how banks can't see into the future and that he might get a better job. I contradict again using YOUR example. If we have your way and so the banks loan to someone who's poorly paid, the banks can't see into the future and they don't realise that his salary won't rise until 5 years! Therefore they lose a lot of money and that man loses £8,000 worth of stuff or maybe even car that he wanted to buy! YOUR idea would be no better than mine as it would only conclude in two ways.
    My Idea: The man doesn't get a loan but and can't buy the car.
    Your Idea: The man gets a loan but can't pay back and loses his car.

    Reply to this comment
  • Notley-Green-logo-250x250.jpg spontaneous_mouse
    Notley Green Primary School B1 week ago

    I think that your ideas are amazing.Keep up with the work.

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  • The-Hundred-of-Hoo-logo-250x250.jpg pioneering_analysis
    The Hundred of Hoo Academy1 week ago

    I agree that the rules need to be more strict because banks lend more money than they should do and people can’t pay it back. I agree with Safer Lending because people need protecting too and not just banks.

    Reply to this comment
  • Elaine-logo-250x250.jpg victorious_snow
    Elaine Primary School1 week ago

    I personally think stricter rules will create a change but not in all countries.The actual solution for this is to show a high debate in everyone part of the world so the government would take this in hand and show actions towards this.It actually took time for even me to notice that crisis happened globally and not only in the UK.So to prevent this, we need to be more united and have that conversations with other countries.

    However, if this is to make changes in our own country, then stricter rule as we all agreed and additionally, some support with new systems that can be made with helps from the government. Systems like: checking to lend money to the right person,machines for safer guarding of money and a type of closer monitoring of pays system.And most importantly banks should give away less money than now because the more money people lent the longer time they take to return plus an addition of money to cover the interest.What banks should now is by saving a little amount they can make it useful for other things that the country is currently in need of. Like,the money can go to hospitals or this may be a way of helping much poorer and homeless people intead of giving away thousands and thousands of pounds.

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  • Millbank-logo-250x250.jpg poetic_camel
    Millbank Academy6 days ago

    Do you think that the Bank is really that important ?

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  • St-Barnabas-logo-250x250.jpg careful_dolphin
    St Barnabas C of E Primary School2 days ago

    I think safer lending because if someone goes into a bank and said can I lend 100pounds the bank will give it to you but you don't pay it back then the bank will louse out on money so no one can get too much money

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  • Notley-Green-logo-250x250.jpg selfreliant_blackberry
    Notley Green Primary School2 days ago

    for a bank they need stricter rules for giving loans and intredsrts

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