What is responsible bank lending?

I would suggest that responsible lending would be based on three rules.

Interest is not charged. The implication is that it is not paid, either.

Credit must not be given except for the purchase of man-made objects eg a ship, a building, artefacts and tools, and to enable production to continue eg to finance a producer in the time until the product has been sold. Credit should not be given for land purchase, or for the land value element of a real estate purchase.

Land titles must not be accepted as collateral for loans. Loans for house purchase should be given only for the fire insurance value of the building itself.

Banks would earn their money by charging directly for their services eg on an per-hour basis. Risks would be individually assessed and insured.

We are in constant danger of forgetting that underneath most of the present banking troubles, including the obscene pay of senior bankers, lies the credit-fuelled land price bubble caused by the banks themselves. Everything else, including the development of complex financial “products” (schemes for legal fraud), follows from the first thing.

We should also note that the practice of usury was banned in the Old Testament, a ban that was reasserted in a papal encyclical in 1745 and remains in force. Unfortunately, Christian churches and groups have forgotten.

The banking system I have described is what would evolve under the right system of land value taxation