With or without the passing of the law of giving in payment

The process of the passing of the law of giving in payment follows a political determination that is amazing enough for the traditional conflicts between the parliamentary parties and, as both its supporters and some of its opponents state, it seems that only some aspects of its law are still to be decided, but not its passing.

Despite the scenarios that predict the consequences of this law, the damages and the benefits that this law will cause are unclear to me; for those who think that the law of giving in payment makes the relationship between banks and customers more equitable, there are other opinions which maintain that even though the banking system may have become more inequitable, it is still functional and serves a general purpose, of economic development and it is unclear whether it will still be able to do that, once the law gets passed.

On another occasion, I quoted Christine Lagarde, the head of the IMF, who, about five years ago, said "Remember that the whole is more than the sum of its parts!", a response that is also appropriate when referring to the law of giving in payment.

But it was also then that I noted that not only does this point of view illustrate a principle of the theory of systems, but it also originates from Catholicism (I hereby announce, in passing, the possible incompatibility between her urge and the Orthodox context of the dispute surrounding the law of giving in payment in Romania; I won't elaborate this observation further, because I don't really think that Orthodoxy played a crucial role in the rallying of the support around the law of giving in payment, even though the author of the law Gheorghe Piperea does have such a motivation, discussed in his book "Parakletos", which he launched last year).

The gains and the losses aren't too clear to me and I don't think that anybody can build a complete scenario, taking into account all the arguments and variables.

That is why I have avoided going into the controversy concerning gains and losses.

Another reason is that, had I merely whispered a hint of an opinion siding with one side or the other, I would have been called "biased", because the conflict around the law of giving in payment has escalated into a tension that was so high, that the factions have boiled down the conflict into an assessment of the ratio of the supporters and opponents of the law, eliminating any rational appraisal of arguments. This also means that in reality, the scandal has regressed into a primitive conflict of opposing interests, over money.

I avoided intervening into the debate, especially since it has been particularly hard for me to come up with a conviction of my own.

But even though I have avoided it as much as I could, the absence of an opinion of my own hasn't helped me a bit.

The fact that I have reported the events surrounding the law of giving in payment, but particularly the fact that I have also published the opinions of the supporters of the law of giving in payment rather than (like the overall mass-media did) only those of the banking side, which opposes it, caught the bankers' attention, and since they are not interested in compliance with journalistic deontology, but just in testing their strength against their opponents, they have counted us among their "enemies", simply because we showed no signs that we would side with bankers.

A few articles criticizing bankers that I wrote, but which concerned other issues than the law of giving in payment, further reinforced their erroneous concept.

Those had no mention of the law of giving in payment.

I have criticized the bankers' arrogance.

Adrian Vasilescu, a strategy consultant with the NBR, immediately confirmed that I had formulated a valid criticism, stating the same thing I had, in a public statement of opinion, but no one thought of labeling him a supporter of the law of giving in payment.

I have criticized the manner of banking communication, including the one practiced by the NBR.

I made no mention of the law of giving in payment.

Banking communication has always been the subject of my criticism and will still be.

That is also the issue of the current article.

If the law of giving in payment gets passed, the banking system will post a defeat, but it is unclear to me how extensive this defeat will be - a bit of restructuring (which involves expenses), some lower profits (or even losses).

I do believe however, that far more important than money losses is another loss of the banking system: the loss of credibility.

The system has lost its credibility along three segments.

• The first, but not the most important segment of loss of credibility is verbal communication

Banks have refused dialogue with their unhappy customers, by invoking all kinds of technicalities and petty justifications.

That is a mistake.

Aside from leaving the impression of weakness, avoiding dialogue also makes it look like you have something to hide, that you are relying on something that escapes the public.

But the public represents the banking system's clientele and in any honest business, the customer is the boss. Avoiding the meeting with your boss means you answer to someone else, a suggestion which has taken shape in this row that surrounded the law of giving in payment.

When bankers accepted the confrontation with the supporters of the law of giving in payment, they behaved aggressively, and impolitely; resorting to their banking specialization that is their characteristic, they have invoked petty details that could have confused their opponents, similarly to how politicians do in the electoral campaigns. Regardless of whether we have understood the arguments that were used or not, the overall impression that bankers have left was that they have not intended to structure a message of truth, and instead just fought to make themselves look smart and their opponents stupid.

This is another mistake.

Political controversies, the ones that are televised, for example, are common, and the public has gotten used to the breaking of every rule of civilized dialogue, through which the political segment has promoted boorishness to the highest degree.

In turn, the banking system has always left the impression that it is at the forefront of class, from the conventional way that bankers dress, to the elegance of expression and to the extent of their culture.

But now, the public has seen that this is nothing but varnish.

The ad published by the banking professional association included blatant lies.

The conclusion of the public: bankers are not different from the rest of the boors and liars at the forefront of society.

The flaws in banking communication have brought down a myth, which had been well reinforced.

• The second segment of the loss of credibility concerns the erosion of the myth of the Central Bank's infallibility

This demythologization has reached the governor of the NBR himself, who unfortunately, has been too confused to successfully adapt to the new public perception, and thus tried to reject the accusation that he was "the lawyer of one bank or another", when in fact, he should have tried to show that he wasn't "the lawyer of the whole banking system", against its customers.

The governor said something unexpected, that this moment when the law of giving in payment may be passed is crucial, the most dangerous in his career.

That statement annoys people.

In his career of twenty five years as a governor, Mugur Isărescu has also faced the spectre of the country's default, which, in one circumstance, seemed inevitable.

But the country's default is a far greater danger than the consequences of the law of giving in payment, because it includes its threats, but is not confined to it (similarly to Greece's example, but without the help of the European Union).

Therefore, the governor's statement has remained mysterious, and the public opinion perceived it as an exaggeration, in the least harmful case.

But if we are to credit Isărescu once again, then his statement can suggest that the law of giving in payment weakens the principles of the banking system and even more, the very grounds of the current social structure.

When looking at things in that way, the Governor presents himself as a conservative, intending to keep the banking system the way it is and to keep it functioning within the parameters that we have become accustomed to.

That is understandable, because yes, the governor's job description does not include the requirement to be a revolutionary, quite the opposite, stability is the key word, the stability of the banking system, the stability of indicators, as a basis for predictability in every sector, among which economic growth takes precedence.

From this perspective, the conservativeness of governor Mugur Isărescu is one of the duties of his job, and his warning is chilling.

But...

Unfortunately ...

It's just that ...

The hypothesis that in his warning, Mugur Isărescu was actually referring to the need to preserve the traditional banking system and the fact that the law of giving in payment endangers it is contradicted by the fact that not only has he tolerated the law of the confiscation of bank deposits, in the event of a bank's default - the already famous bail-in law -, but has actually fought for its adoption.

Or, the bail-in law destroys the traditional concept about the status of banks and the banking system.

Had he been concerned with preserving the traditional system, then Mugur Isărescu should first of all have vehemently opposed the passing of the bail-in law, in the name of general interest - both that of banks, as well as that of bank customers.

By not doing that, his current opposition to the law of giving in payment suggests that he is the banks'advocate, against their own customers.

This is a position which he shouldn't have ended up in, because it knocks him down from the pedestal built for him with so much effort, over a quarter of a century, that he was already sitting on, like a living statue.

Our governor used to be a legend, and now he is vituperating Radu Soviani.

• The third and most important segment of the loss of credibility is the banks' attitude

No one should have had to think that the law of giving in payment is necessary.

Once the first lawsuits by the customers against abusive clauses were filed, the banking professional association and/or the Banking Association should have called emergency reunions and persuade their members that such lawsuits are very harmful to the banking industry and that immediate measures are necessary, to review the contracts and remove the clauses that have been challenged in court.

Instead of doing that, the banking system has taken an insolent attitude and has accepted to fight in the courts, without any worry over the fact that if it lost a lawsuit, that would make it look like a bunch of robbers.

And banks have lost, and they didn't lose just one lawsuit.

What's more, the banking system has rallied against Gheorghe Piperea, the lawyer who initiated the abusive clauses class actions and has informally declared him "persona non grata", refusing to have any dialog with him, avoiding any public events where the "danger" of getting into controversies with him existed, instead of seeking him out and building the solutions together.

An unforgivable mistake, attitude-wise, which irritated their customers.

The moment the Swiss franc exchange rate blew up, bankers should have shown concern for the debtors which would have obviously been pushed into impossible situations.

Once again, the banking professional association and/or the Banking Association should have gathered in working sessions, in which bankers themselves should have configured solutions, instead of waiting for the situation to resolve itself through repeated parliamentary initiatives.

That would have been the rational thing to do for the banking industry, in its own interest, because by controlling the configuration of the solutions, they could have kept them within the boundaries of the banks' functions. That would have also added the role of "lawyers if their customers", instead of publicly expressing themselves as stubborn opponents to the finding of solutions.

But instead, bankers have treated their customers with contempt, meaning that the press subordinated to the banking system blasted them with insults, calling them "stupid", "lacking education", "greedy"; in fact, a high ranking banking personality mentioned that in ancient Rome broke debtors were cut into pieces which would then be divided among the creditors.

A horrible mistake in attitude.

Faced with the threat of the passing of the law of giving in payment, the banking professional association paid for an ad, which deliberately lies claiming that "the law on the insolvency of individuals exists" (even though it has not been promulgated) and that it can help distressed individuals.

What kind of attitude is that?!

Indescribable.

One mistake after another.

• What I think the banks should do

The credibility is a greater loss than the potential passing of the law of giving in payment.

The loss of credibility of the banking system does indeed have disturbing consequences.

That banks operate in a regime of public trust is already a cliché.

On the other hand, perhaps the fact that the loss of credibility of our banking system can create complete confusion is worth mentioning, even though it is obvious.

The idea of the NBR strategy consultant, Adrian Vasilescu, that the banking system should become more "human" isn't bad, but it needs to become more detailed - bankers should rebuild their relationships with their customers, which, contrarily to the statements of NBR governor Mugur Isărescu (a regrettable mistake), they need to view as partners, and not just on a declarative level, but when it comes to money as well.

I can understand that we are working with a specific type of banking system, which is based on a specific concept, but keeping an eye on other types of systems, which are based on different concepts, where they practice interest-free loans, for instance, would not be useless.

Perhaps the alternative, contemporary system of sharing the risks of lending (and not just of the burden, in the unfortunate cases), can suggest ways to rebuild the trust in the banking system.

Perhaps the explicit partnership in the alternative systems suggests good ideas.

The foggy international situation on the viability of this banking system model that we also apply to and the debatable nature of the model of economic development based on interest and loans, cause to to be open to alternative ideas.

Such an assessment is opportune now, with or without the passing of the law of giving in payment.

Regardless of what happens.