Britain's high-street banks have been much criticised this week for not lending enough money. "Turn on the lending taps," has been the cry. "It will help businesses and it will help the economy." While kick-starting the economy is important, we don't want a swift return to the days of uncontrolled lending of a few years ago, when even the most credit-blacklisted seemed able to borrow thousands of pounds from banks keen to swell their profits.
But we do want a return to responsible lending. In fact, I woud like to go back even futher, to the days when bank lending decisions were made by local branch managers, rather than by a central department relying on some facts and figures number-crunched into a computer.
Bringing the personal back into lending would help in many ways. For starters, knowing a borrower goes a long way towards making a judgment about whether they are a good prospect or not. Such qualities as decency or genuineness will not be picked up by a computer, but can become evident in a face-to-face meeting.
For instance, when I was struggling as a young reporter, my bank manager called me in. I was expecting trouble because I was always in the red, but he sat me down and revealed that he had had the same money troubles when he was my age. He then gave me some basic advice, waived some charges and, effectively, encouraged me to take better control of my finances. He knew that by giving me a little helping hand and trust, he was likely to be repaid tenfold in the future as I took out loans and mortgages and brought in plenty of income to the bank.
Such an approach may seem terribly old-fashioned now but a return to hands-on lending would make a massive difference. For starters, an understanding lender may give a cheap loan to someone struggling with cash a few days before payday. Such a move would help to stop people falling into the hands of unscrupulous back-street lenders who pile on charges and misery to the hard-up. But the personal approach would also help people to get better control of finances, so less of their cash disappears in loan charges and leaves them more to spend, which would help the economy.