From David Warr.
I WAS deeply troubled by the response from two leading bank professionals to Kevin Keen’s suggestion that the States of Jersey should consider setting up a local bank.

Hans Baerlocher of UBS has clearly forgotten that his bank in 2008 wrote off U$54.5 billion in mortgage related financial instruments connected to the sub-prime lending debacle in the US. Maybe if UBS had stuck to ‘traditional banking’ as Mr Baerlocher describes it, UBS investors would be feeling a lot more comfortable.

I also remind Geoff Cook, of Jersey Finance, that it is estimated that the total losses to the global financial system of the sub-prime lending disaster will be U$500 billion. The result appears to be a global recession.

I therefore wonder what ‘the hell crossed the minds’ of those bankers who offered those now infamous NINJA loans to those people who had no income, no job and no assets.

The reason so many banks got away with it for such a long time is because the people depositing their money with these esteemed institutions had no idea to whom their money was being lent. That’s the beauty of being a global outfit.

If you knew that your hard-earned savings were being lent to individuals who couldn’t ever afford to repay that debt would you have invested in that institution?

A locally owned bank that lends and saves locally makes a huge amount of sense. Money earned in our economy is, in turn, lent out within the boundaries of our economy.

The multiplier effect within our economy would be hugely beneficial to Jersey plc and of course we would know exactly how well that business was doing because it would be intrinsically tied into our community.

While there is clearly a place for global financial institutions and Jersey is all the better off for that fact, there is also I believe a place for smaller local institutions such as Mr Keen suggests.

While I fully respect the expertise of both Mr Baerlocher and Mr Cook, sometimes people in glass houses shouldn’t throw stones.
La Bicherie,
Augrès Farm,
Trinity.