"It is time that people took responsibility for managing their own money, and stopped expecting banks to do it for them."
My new post at Pieria talks about the nature of the relationship between banks and depositors:
"I recently wrote a post with Euronomist in which we suggested that depositors should be explicitly charged for deposit insurance, rather than insurance being implictly provided by the state or covered by a levy on financial institutions.
"This did not go down too well in some quarters. There were a number of comments along the lines of "why should I pay for the risks that banks take?" and "banks should look after their customers' money". Underlying these remarks was a fundamentally wrong understanding of the nature of the relationship between modern banks and their depositors. And this wrong understanding is the main source of anger towards banks for putting depositors' money at risk, and anger towards banks for giving rubbish returns to savers. Most depositors believe that the job of banks is to keep their money safe. Many depositors also believe that they are entitled to a share in the returns that banks make from "lending their money out". In short, depositors expect banks to invest their money responsibly to generate good returns, and absorb the risk of those investments so that depositors do not suffer losses. But that is not how banks see it. And the law is on the side of banks.......
Read more here.