A banker takes small sums of money provided by individuals who are looking for a safe investment, aggregates it into a much larger pool of money, uses their specialized knowledge to identify safe candidates for loans, and makes that capital available to those individuals at a small cost to cover the inevitable losses of other loans while providing an adequate return to the individual investors.

To understand what bankers provide for the profits they take all you have to do is examine the economy surrounding the few places people have no access to capital that is provided by banks. These are the third world slums where people have no upward mobility. Many charities and non-governmental organizations today are trying to find a way to provide bank-like loans to individuals who live in these areas because the only way these individuals can build wealth for themselves is to gain access to capital though an organization that operates like a bank.

And I will extend what I wrote earlier even further.  Startups do NOT get money from banks.  Start ups get money from venture capitalists.  Once a start up gets going, and gets large enough, it will offer an IPO, which then gets it to go to the next level.  A bank will provide a line of credit, sometimes, which can help.  But beyond this, not much else.  The job of a banker is exclusively involved with money.  Money, in and of itself, is a means of facilitating the acquisition of goods and services.  But, merely pumping more money into an economy doesn't fix things.  Doing this will end up causing inflation if sufficient goods and services are not generated.

This is not to say that bankers don't provide some service.  In an economy, they do.  But, in comparisons to a lot of other parts of the economy, bankers contribute very little to the economy.  Some would argue, "but banks hire people, and employ people".  Yes, but so do casinos and race tracks. Casinos and race tracks contribute very little value to the economy.  I would argue less than banks, but still both don't do much.

There is a need for the bank and its ability to help society faciliate the consumption of future production in order to make now better.  There are times accelerating this process can get someone somewhere.  But this ability is far less positive than one would initially believe.  And on looping back to the next note, if someone occupying a park long hours, feeding the poor providing hope, and building community comes out, I would argue this is more important than a banking firm who ends up playing around with derivatives and gets rich on them.  At least the down side of the occupying the park is less than the investment house monkeying around with derivatives.

Actually most small businesses and start-ups DO use banks to get financing; after all a restaurant, farm, small retailer or countless other small firms will never be large enough to attract interest from venture capitalists or be large enough to have an IPO. Certainly entrepreneurial start-ups (like tech companies) which are so vital to economic growth need venture capital because they're too high risk for a bank; but that doesn't mean a bank doesn't play a critical role in the economy.

Beyond this, companies of all sizes use banks to finance their payroll and to pay for their inventory because their costs are fairly constant throughout the year but their revenues are often very seasonal.

On top of this, as much as it goes against the rhetoric, banks actually prevent people from being exploited by those with capital. The most obvious example of this is the realestate market. Since an individual can go out and get a low to buy/build a home or become a land-lord people are not trapped paying exploitative rents to land owners simply because those land owners are the few people with the wealth to be able to purchase real estate.

Banks, and financial institutions that lend money in general, offer vital services that are critical to ensure the economy operates. The core problem with them is that their services are TOO GOOD and people willingly overindulge in

Except... that is where most startups get their money from.

Even the bigger risky ones... you usually need a loan just to make your "proof of concept" before venture capitalists will be willing to step in.

If your wondering why there haven't been as many IPO's as there were say... 10 years ago.

Your not going to like the answer... but it's regulations.

Venture capitalists want companies to go public ASAP because venture capitalists want to make their money back... and after the .com bust, a BUNCH of new regulations were put in place to prevent companies from going public.

http://www.ft.com/cms/s/0/e89c26ea-faa0-11e0-8fe7-00144feab49a.html#axzz1buiDJuOY

Most important takeaway of that article?

Have you actually been involved with the process to get funding for a start up?  No, most businesses initially don't use banks to get their intiial start up money.  Banks don't lend.  I can tell you story after story of this not being so. It isn't how it works.  Most money to start comes from a person's own savings, that they do anything.  Once they have an established track record, a bank will then extend them a line of credit.  That is how things work.

http://www.marketing-resources-center.com/small-business-startup-loans.html

Small business startup loans can come in many forms. From government loan programs, to relatives with money to invest, here are 6 sources you might want to consider for financing your business. 

1.Your Own Pockets
Believe it or not, this is the most popular source of startup capital. Don’t have a vault full of cash? Many people mortgage homes or sell property to raise the funds they need. Though it may be high risk, for some it is the fastest, easiest, and most reliable way to raise startup money.

This is in keeping with how franchising works.  Look, for example, at what it takes to own a McDonalds:

http://franchises.about.com/od/fastfoo1/fr/mcdonalds.htm

Of course, the Small Business Administration will end up intervening to get financing in a number of cases.  But to stand by what I said, there is a simple test.  If anyone here wants to get a business started, try going to a bank with just an idea for a business, and even a business plan, and get funding.  This means you have no collateral either to back up the loan, just an idea.  It isn't going to happen.

With the example of the franchise, you end up with a situation where the company who has the franchise model does the bulk of the work of adding value, and then there is enough there that the bank feels comfortable enough that it will make money of this, so it will lend.  But in this, what exactly does the bank bring to the equation?  Not a lot.

Why are you limiting it to "no collateral"?

Does it invalidate the value of a bank if you can convert an illiquid asset (like home equity) into capital to start your business?

Now, no one gets money from any source based on an idea alone because an idea alone doesn't translate to success. With a well defined viable business plan and solid evidence to demonstrate that they can execute their business plan they often can get a bank loan even without collateral.

As an example, I know someone who is a musician and worked as a music teacher through university and (after dropping out) took over the administration of the music school he worked at. After doing that for a few years he noticed that there were no music schools in new communities, he found a retail space, put together a business plan, and went to a bank to get a loan and he was successful at getting money to renovate the space, buy insturments and retail inventory, and get a line of credit to cover operating expenses for several months; and today he owns two successful music schools. Is he wealthy? No, but he is on his way; and there is no way he would be as successful as he is today had he not been able to secure a loan from the bank.

There is the issues of a track record.  This is really tricky to define.  Without a record of sales, which a start up is lacking, the ability for forecast a year or longer out, which is essential for funding, ends up being really hard to do, thus undermines a business plan getting funded.  It is one reason why lending goes to established businesses on the whole, and anyone doing a startup ends up having to get real creative to do anything, most of which is done not involving a bank.

http://articles.bplans.com/financing-a-business/how-to-get-your-business-funded/58

Commercial lenders

Banks are even less likely than venture capitalists to invest in, or loan money to, start-up businesses. They are, however, the most likely source of financing for most small businesses.

Start-up entrepreneurs and small business owners are too quick to criticize banks for failing to finance new businesses. Banks are not supposed to invest in businesses, and are strictly limited in this respect by federal banking laws. The government prevents banks from investment in businesses because society, in general, doesn’t want banks taking savings from depositors and investing in risky business ventures; obviously when (and if) those business ventures fail, bank depositors’ money is at risk. Would you want your bank to invest in new businesses (other than your own, of course)?

Furthermore, banks should not loan money to start-up companies either, for many of the same reasons. Federal regulators want banks to keep money safe, in very conservative loans backed by solid collateral. Start-up businesses are not safe enough for bank regulators and they don’t have enough collateral.

Now, once the business is established, shows a track record, then a bank will extend them a line of credit or other financing.  There are exceptions to this, but this isn't the norm, as is seen by what I wrote above.

And here is more info on what the SBA does:

http://www.entrepreneur.com/article/79254

And I can tell the tale of a local tea room in the area that got squat from the bank, but now established, they want to lend money.

Btw, Kas, dunno if you read this yet - http://www.guardian.co.uk/world/2011/oct/26/occupy-oakland-veteran-critical-condition

Don't know how there's justification for the police here.

So, that is the vet who is in critical condition.  Here is a video of a Flashbang launched on the protesters who went to try to help him:

Upon further review, that Flashbang was a different incident.  This here is where the vet was being taken who got shot: