Taking Stock / Dear Eva

The campaign of terror is roaring full steam ahead.

First came Aharon Golan, the electrician starring in the Banking Association's ads, who tells of the provident fund in which he's been saving his money for 41 years. Now the banks bring us Eva Rosenfeld, 57, hailing from Rishon Letzion.

Her story is quite similar: "The money belonging to my husband Robert and me has been in a provident fund for 22 years, because I prefer it to be in the safest place - the bank," Eva says.

She goes on: "Throughout the years, I deposited and saved at the place of my choice. So what right do they have to put their hands on my money and take it out of my bank? Nobody asked me, nobody's asking my permission - why? Who are they to decide what to do with my provident fund? With all due respect, leave my money alone."

For the sake of our discussion, Eva, I'll assume that's an authentic text you wrote, not the product of some happy-go-lucky copywriters hired by Moshe Teumim and Modi Kidon. Now:

1. Do you remember December 28, 2002, Eva, the day Bank of Israel Governor David Klein warned that the collapse of a major Israeli bank was not an "unthinkable" scenario? Bank shares were trading at half their equity value, and the stench of impending financial crisis was in the air.

Why was there fear that Israel's financial stability might be in danger? Because of the combination of two factors: one, the recession that slammed into the country's largest corporations and borrowers, the other that there was no source of financing for them outside the banks. Most short- and long-term credit comes from a handful of banks.

Their domination makes companies and households dependent on those banks, and it also increases the banks' dependence on the companies. And that raises the risk factor of the entire marketplace.

One of the goals behind severing the banks from their provident and mutual funds, Eva, is to create a more diversified financial system from which everyone will benefit: the customers, the banks and the entire economy.

2. Sorry, Eva, we didn't mean to begin this discussion with twaddle about "capital market structure." Let's talk about things closer to home.

Where is your money? And where is the money of the bankers you are valorously protecting?

In 2002 and 2003, thousands of bank customers - mainly the rich ones - withdrew massive sums from Israel's banking system. They were worried about the banks' stability because of that domination we were talking about.

I imagine you left your money at the bank, though. That is all right, and in retrospect, it was the right thing to do: it isn't as though you had any alternatives, because customers like you are essentially captive to the local banks. But if you're going to serve as a mouthpiece for the banks, we thought you should know that some of the bankers and bank owners shifted their own money to foreign banks (because they sleep better at night that way) and to non-banking investment management companies (because they expect these companies will generate higher profits).

3. You tell us, Eva, that you don't want anybody making decisions for you. You're right. We hope that's really the situation, that you make your own decisions. By the way, did you ever try to withdraw your provident fund or savings account and move it to another bank? Try, for the hell of it. You may discover you aren't the one calling the shots, especially if you have an overdraft or mortgage at the bank.

In any case, most of the provident fund customers don't make their own decisions. The clerk at the bank makes them. The customers' financial ignorance, dependence on mortgages, overdrafts and other details place them in a very poor negotiating position against the bank. That is why the Bachar team, comprising people from the Bank of Israel, the Finance Ministry, the Antitrust Authority, the Justice Ministry and the Israel Securities Authority, want to reform the structure of the banking system.

4. We wanted to tell you about our buddy, Moshe. Readers of this column remember us telling about him six months ago.

Just like you, Moshe kept most of his savings at one of the big banks' training funds. No, he hadn't chosen it, his employer decided for him. His employer was a company that worked with the bank managing the fund.

Moshe was sure that keeping his money at the big bank was a good move. But one day he discovered that if he'd moved his money to a non-banking fund management company, he'd be earning 50 percent more for his money.

It took Moshe five years to convince his employer to move his money. And when he gave the actual instruction, he received a scary letter from his bank, warning him about the dreadful pitfalls inherent in non-banking training funds.

Moshe was frightened, but he withdrew his money from the bank anyway. A year later his new fund was earning twice as much as the old one had.

And now here's the surprise, Eva: Moshe isn't an electrician. He has a degree in economics, a Masters degree in Business Administration, and he even studied business in the U.S. Yes, even people like Moshe find themselves captive to the Israeli banking system.

5. To sum up, Eva, we have a suggestion. If you want to consult, do drop by. We'll take a look at your banking papers and check whether your money is sitting in a zero-interest deposit, or in a makam Bank of Israel certificate. We'll check how much interest you pay on your overdraft, and whether you have the option of repaying your mortgage early, and so on.

Who knows, you might be surprised to discover that you aren't the one making the decisions after all.