The Ethics of Banking: Conclusions from the Financial Crisis (Issues ...

24 2 The Ethical Economy of the Credit Market
In the modern market economy, it is rational behavior for anyone to supplement
their own capital with external capital, i.e. with loans, because they would miss
out on too many business opportunities if they were solely dependent on their own
ability to build long-term savings. In this respect also, loans have the function of
transforming the time interval between payments.
The difference between the compensation for the transformation of time periods
that borrowers pay to the bank as lender, and the compensation paid by the bank as
borrower to its deposit customers as its creditors, forms part of the bank’s profits.
Banks operate with the differential between two payment promises: on one side,
they lend money from their on-demand deposit customers, and promise them that
their deposits will be kept liquid at all times; on the other side, meanwhile, they lend
money to their borrowers, who promise the banks in return that these loans will be
repaid.
From the functions of banking, from the nature of the matter at issue, we are able
to infer the potentially ethically sensitive areas and the corresponding ethical duties
and virtues of banking. The obligations and duties of people who work in banking
can be established from the nature of their task within the economy as a whole.
These duties are established by conducting a critical interpretation or hermeneutic
inquiry into the functions and institutional tasks of the banks.
From this, it transpires, many of the ethical duties of banking coincide with the
legal obligations that are formulated in banking laws and regulations. The laws of
banking can only articulate legal duties, however, and not any duties concerning the
intentions and virtues of economic action. The law cannot oblige anyone to espouse
the intention of the law as their own intention, and it can only define and demand
an ethical minimum of obedience to the rules of the law. It cannot impose a binding
obligation on anyone to embrace obedience to the law as a personal intention.
Duties of Banks Arising from the Nature of Their Tasks
to Facilitate Payments and to Enable Credit
The task of facilitating payment transactions is not, in itself, ethically sensitive but
it does throw up certain ethical questions.
Duties Arising from the Bank’s Task to Facilitate Payments
and Safeguard Liquid Funds
Bank customers often complain about the delay in processing credit transfers into
accounts, whereas debits are deducted from customers’ accounts immediately. This
is a criticism of the banks’ value-dating practice. In applying uneven value-dating
practices, banks not only save interest payments on bank deposits with credit balances
but also earn a little extra interest when customers’ accounts go briefly
overdrawn and incur interest charges on overdrawings that only arise because of