With high mortgage costs for home buyers, low interest rates for savers and continuing worries about the possible meltdown of the whole over-complicated, 'too clever by half' banking system, Backwater, a sideways-from-centre think tank, has proposed the establishment a revolutionary new kind of financial institution.
They suggest setting up a series of groups or organisations where those who had money they wished to save could deposit funds and gain worthwhile rates of interest, and others who sought to buy homes could then take out loans at a reasonable rates of interest, secured against the value of the houses. These organisations could be locally based, mutually-owned (i.e., like co-operatives) and run on a not-for-profit basis.
With no ludicrously overpaid senior executives, no shareholders' dividends and no large bonuses being paid to anyone, the 'spread' - the margin between borrowing rates and lending rates - could be kept modest. Lenders as well as borrowers would be 'members' and there would be no excessively large bonuses paid to 'directors'.
The funds of these organisations would be invested entirely in loans to its members, not in any other complex financial or speculative enterprises, and similarly the funds would be raised entirely by accepting deposits from savers, not from any other forms of City borrowing or other complicated financial instruments.
Since these proposed institutions would be mutual - i.e., owned by their members - they would actually be more like societies that banks, and could concentrate on loans which promoted the construction of homes and buildings. Unfortunately the proposers of this idea have not yet been able to think up a suitable name for such institutions.
Sadly, the idea has been rejected out-of-hand by the government and its advisers in the City and the banking industry, who describe it as "A completley crackpot idea which would never catch on and which could not possibly work anyway."