An interview between EE (the interviewer) and AJ (A financial crisis advisor).
EE: Why did the financial crisis occur?
AJ: The Financial crisis had occurred in 2008 and effected the majority of people worldwide. The cause is still unknown however there were three main factors which caused the crisis. Firstly, the way bankers were paid. The Bank of England would pay Bankers when they sold a loan. As a result, Bankers were encouraged to take risks. This made the bank in dept. In addition to this, the rules for banks were another factor. If the rules were made clearer and stricter, this would prevent Bankers from lending unsafely because they would have a clearer guideline.
EE: How could we prevent this crisis from happening again in the future?
AJ: To prevent this from happening again I would enable safer lending into the banking system. Safer lending will allow Bankers to only lend to people who most likely will be able to pay it back. This will save the bank from mass amounts of dept. Also, loans will be fairer when they are shared due to the fact that they will only go to the trustworthy people. In addition to this, people who cannot afford a loan will be unable to receive one. If the banker is aware that the person certainly cannot pay them back then he is obliged to refuse to give them a loan.
For example, the bankers lent John a loan, despite his low credit score. As a result, the bank lost money and John constantly worried about becoming bankrupt. This is why I think we should enable safer lending because it will not only impact banks worldwide but people too for the better.
In conclusion, if safer lending was introduced to the banking system it would have positive impact on many people and the way they use the bank. Also the bank would benefit from this idea and could possibly be safer from another crisis.