THERE was a time, not so long ago, when the banks went about their business without paying too much, if any attention, to public opinion.
* Read more blogs by Peter MacMahon at the scotsman.com Business Club - click here to find out more *They based their decisions on their hard-nosed business experi
ence. They made vast profits for which they were criticised, but they did not really care. What mattered was that the shareholders were happy.
Times have changed. Banks' reputations are in tatters thanks to the enormous amounts of money they have had to write down (ordinary people call that lose) on sub-prime and any amount of other complicated, exotic financial "stuff".
They have have been forced into the humiliating position of having the government poised to take large shareholdings in order to ensure their survival.
Humility and a greater understanding of the view of the general public - their customers - should be the order of the day.
The problem for our great financial institutions is that there are still some who do not appear to have got the message. They just don't get it.
The reactions to the Bank of England's astonishing 1.5% interest cut, demonstrates that.
Almost immediately yesterday Lloyds announced that its mortgage rates would follow the trend.
Now, there are some who would say that as one of the biggest beneficiaries of government largesse - in terms of the amount it and its take-over partner HBOS are getting - they would, wouldn't they.
Getting so much government dosh, and a waiver of competition rules for their take-over, would make you want not to offend politicians, Lloyds critics might argue.
However, one can put another interpretation on Lloyds actions, followed earlier today by Abbey.
It is this: that they are more in touch with public opinion then their peers.
Now, it is true that the Libor rate is more important for in terms of what it means to lenders and borrowers as it dictates the rates the banks charge,
As it happens that has come down substantially. Libor rate for borrowing sterling for three months dropped to 4.49% from 5.56% on Thursday, before the Bank of England rate cut was announced.
And that is likely to mean that other banks, who depend on borrowing from each other at a rate based on Libor, will be able to cut their mortgage rates today.
But those banks which do will now be perceived by the public as being behind the curve, and not as sensitive to their customers as the likes of Lloyds and Abbey.
Many members of the public believe that they now own the banks anyway and that should make them more responsive to their views.
As it happens they don't, yet, as the deals have not gone through. And when the government takes its stakes it will not be telling them what interest rates to set.
But that is not really the point. Ministers and opposition alike have made it clear today that the Monetary Policy Committee decision should be reflected in lending policies.
As an aside it is amusing that David Cameron says if the rate cuts are not passed on; "further action may be necessary", adding: "The Government owns some of these banks now, so they can take steps." That makes him more left-wing than Labour.
But leaving that to one side, the politicians' approach may be a populist but they are, to distort a well known phrase, populist with a purpose: to get the message through to the banks - without actually directing them - that they have to respond.
They may not like it, but the banks had better heed the message. Times have changed. They must change too.
The full article contains 632 words and appears in The Scotsman newspaper.
