At first glance it looks like an ad run by the Histadrut labor federation, or maybe by one of the many social organizations that sprout like mushrooms as treasury decrees rain down and poverty spreads. The image shows aging workers against a black background and a heart-wrenching quote: "I'm being hurt, my income is being slashed - please stop!"
One tells us he's "Aharon Golan from Sheikh Munis," 41 years an electrician. "With these hands I earned shekel by shekel and put my money in a safe place. It's money to pay for my children's education. I won't let that money be taken from my provident fund and given to somebody I don't know. I worked for it all my life. Why should someone else play with my money? I won't be a guinea pig."
No, that isn't a sob-story ad from Histadrut - it's the brainchild of the Association of Banks in Israel, no less - part of the banks' battle against the as yet unveiled recommendations of the Bachar panel. This committee is preparing a dramatic reform of the capital market and banking system which centers on cleaving the banks from their provident and mutual funds.
The sudden fondness of hard-working Mr. Golan for banks is reminiscent of "the Stockholm syndrome" - the sympathy that grows between hijack or kidnap victims and their captors over time that has been documented in scientific studies.
So, can it be that after decades of being held captive by the banks, Israelis have come to identify with the banks' interests? One's heart must go out to Aharon Golan, who gleaned shekel by shekel from his honest toil. One's heart also goes out to the hundreds of thousands of bank customers whose financial ignorance the banks have exploited for decades, dishing up dreadful financial advice for top dollar.
Here are a few things Aharon Golan's captors never told him during all his years in chains:
1. Did you know, Aharon, that people who abandoned the banks' provident funds for those run by private brokerages earned tens of percent more in the last seven years? Did you know, Aharon, that while you were scrimping and saving for all those 41 years, the difference in performance between a bank fund and a private one could amount tens or even hundreds of thousands of shekels - and that includes for a small saver like you? Did you know that a provident fund isn't meant to barely maintain your money's value, but to actually generate profits? Did you know, Aharon, that you could have made considerable profits with little risk?
2. Did you know, Aharon, that customers who turned their backs on the banks' provident funds continued to sleep well at night? All they did was to take the management of their money out of the banks - the money itself stayed there.
3. Aharon, did you ever just once walk into your bank and have a clerk there advise you to invest in something managed by another bank? Or, like the rest of Israel, were you offered Hobson's choice - only the instruments your bank managed? Does that make sense to you, Aharon? The ad says you're an electrician. When you buy equipment to do your job, do you buy it all from a single store, or do you shop around for the best deal? How would you like to be forced to buy everything from a single supplier?
About your pension plan
4. Say, Aharon, you probably have a pension plan. Do you know that under the pension reform carried out a year ago, the government slashed your pension rights and postponed your retirement by two years? How do you explain that the reform cutting your pension payments passed like a caravan in the night, with neither noise nor notice - but a reform cutting the power of 50 bankers is raising an unholy din of opposition? And - really Aharon - why have you of all people become those bankers' mouthpiece?
5. Tell us, Aharon, do you really want to live in a country where 50 bankers control all the credit? Do you want to live in a country where no business can so much as twitch without a banker's say-so?
6. Hey, Aharon, do you feel all warm and fuzzy when you stroll into your bank branch? Wouldn't you like to feel that the clerk talking to you has nothing but your greatest good in mind - that he has no reason on earth to persuade you to invest in something that isn't entirely for your benefit? That he has nothing to gain personally?
7. Say, Aharon, do you remember "black Sunday" of December 3, 1995? No? Then you don't know why Bank Hapoalim calls it a black day, and you don't know why the chairman, Amiram Sivan, said foreign investors would flee Israel.
That was the day the committee headed by David Brodet, then director-general of the treasury, ordered banks to sell their holdings in non-banking companies. The banks went to war, shouting that this was a Bolshevik intervention in business and that foreign investors would avoid Israel like the plague. Most especially, they would shun the banks.
You might find it hard to believe Aharon, but the banks continued to flourish nonetheless, and the economy did not retreat to the Middle Ages, and two years later the Arison group bought control of Bank Hapoalim from the state. It did that because it thought the bank was a good business and it understood a government has the right to impose financial market reform.
We'd like to bring you a quote from the chairman of Bank Hapoalim in an interview with Haaretz. Back then, we asked him about the need to increase competition in the banking sector and in the capital market.
"In financial services, the competition is very strong," he said. "It is evident in areas where it pays the banks to compete. In the business sector, it pays [for the banks] to compete and they compete very strongly. They may not compete in the sector of the individual consumer, households, because they don't make money from it."
You must be wiping tears of laughter from your cheeks by now, Aharon - and so are we. These days the banks have to disclose their sources of profit and we know their most profitable operations are actually those services to the individual consumer - to households, to you and to your children.
In short, Aharon, the bankers are a bunch of great guys who do great work and we wish them all the best. May they live long and prosper and make money for their shareholders. It is only natural they would want to preserve their power and oppose any reforms that might compromise that clout.
But don't forget, Aharon, there has never been one reform in Israel that didn't rouse fierce opposition from its "victims." But at the end of the day, most reforms have proved to be a blessing for the economy, for consumers, for the business community.
And yes, Aharon, for you.
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