From The Independent:
All the building societies that transformed themselves into banks quoted on the stock exchange between 1989, starting with the old Abbey National, and 2000, when Bradford & Bingley took the plunge, have either failed or had to be rescued. Following Bradford & Bingley’s demise, there is not one left.
Meanwhile the building societies which resisted the temptation, such as Nationwide, Britannia, Yorkshire and 56 others, have gone on doing their core job of providing home loans for ordinary people. They have been virtually untouched by the financial crisis.
You can read the full story here.
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13 Comments
“All the building societies that transformed themselves into banks quoted on the stock exchange between 1989, starting with the old Abbey National, and 2000, when Bradford & Bingley took the plunge, have either failed or had to be rescued.”
That’s a somewhat creative summary – 3 of the main building societies which listed were simply bought up (as the article itself notes), which is hardly surprising from smaller companies listing on a relatively consolidated market.
and this article ignored the article later on in the financial section of the paper which reported that the Derbyshire (assets of £7.1bn) and Cheshire Building Societies are being taken over by the Nationwide due to exposure to US property markets. So not all Building societies have survived the credit crunch unscathed!
This is an excellent article, if a little harsh. However, the Tories will have to explain over the next 18 months why the whole Thatcher project is unravelling to the expense and detriment of citizens. Watch their poll ratings drop, though perhaps they can get enough money out of their friends in the city to prop their support up a while longer.
Some slogans for the next election?
‘Thinking of voting Conservative? Why not put all your savings on the 3:30 at Kempton – at least you stand some chance of winning!’
‘Now that the City Speculators have ruined the economy and halved the value of your home, are you really going to put the country in the hands of their Tory friends in Parliament?’
Re-mutualising NR and B&B would be a good idea though latter losing its savings operation is not helpful.
De-mutualisation egged on by carpet-bagging agents provacateurs has been a terrible thing. My wife got a few bob when A&L went and I did when Friends Provident did. But we’d rather have kept these mutuals going.
(45 years a proud nationwide customer, 25 years a co-operator)
Good God, I agree with Chris Paul! we need to rediscover the advantages that Co-ops and mutials have in delivering social justice in a capitalist system. 19th Cent Liberals were key players in the early co-operative movement.(24 years a Co-operator)
There is a certain hope in watching both Thatcherism and Self-Congratulism (i.e. G.Brown) unravelling at the same time.
It’s interesting to note the way financial crises are handled these days:
– B&B seem to be in trouble
– Vince Cable in on telly saying govt should act quickly and nationalise if necessary (IIRC)
– B&B is nationalised.
Well… perhaps not the most accurate and unbiased view of events, but also not without some validity either, I feel.
In protest at the failures of the banking system, excessive charges for retail banking customers (particularily the poor when they go overdrawn), and the banks profligate lending policies, I have moved my bank account to a building society which offers online banking and attractive savings rates. I urge you to do the same.
“However, the Tories will have to explain over the next 18 months why the whole Thatcher project is unravelling to the expense and detriment of citizens.”
Thatcher has been out of power for nearly 20 years and for the last 11 we have had a government nominally ideologically further away from Thatcher than the Lib Dems, and yet you want to blame Thatcher???
Meanwhile all the “financial experts” here and in the Independent seem to have overlooked the fact that the 9th and 11th largest building societies announced that they were merging with the Nationwide to avoid financial problems.
Still why let a bit of objectivity get in the way of a good whinge at the Tories?
Why indeed, Mark!
Mark: I fail to see how the Blair years were not Thatcherism in action. While Lab may have thrown money at govt services, they did so to the great benefit of business interests. We’ve seen liberty eroded; democracy sold; stealth taxes and gross incompetence in handling of financial institutions.
The result is that we have no economy, and a huge bureaucracy.
I really don’t see this as a simple left-right ideological comparison… but what I do see is Maggie’s fingerprints all over it.
Government is becoming simply a funnel into the pockets of biz. Govt should be creating value, not lining pockets.
“We’ve seen liberty eroded; democracy sold; stealth taxes and gross incompetence in handling of financial institutions.”
Those are hardly fingerprints of Thatcherism. Thatcher may have been a centraliser but she didn’t build up vast bureaucaracies. She didn’t try to erode liberties during the IRA bombing campaigns the way that Brown and Blair have done. Nor was Thatcher responsible for stealth taxes or even gross incompetence in the regulation of financial institutions (apart from BCCI which was plain fraud to which the bank’s auditors also succumbed).
I am not a Thatcher fanboy, in particular her style, but it seems to me that she managed to deal objectively with the situationn presented to her whereas this Labour government has always been very bad at seeing the would from the trees and seems to think that if it shuts its collective eyes and makes enough noise, it’s problems will all disappear.
Seems to me you are just trying to equate two of your own hate figures.
Okay. Admittedly some of that isn’t Thatcher’s style, but I would caution against absolving Tories from banking problems. They created the housing mess on a promise that it would give consumers more choice and cheaper mortgages.
It was Tories under Thatcher who gave banks the rights to sell mortgages and allowed BS’s to therefore become banks.
Vince Cable argued against that policy back then according to Evan Davis: http://sarabedford.com/blog/2008/09/do-you-know-as-much-about-economics-as-vince-cable-george/
The problem is a modern one not one that harks back to the 1980’s.
Both the banks that have failed and a major part of HBOS were former building societies that relied on securitisation. The use of securitisation on such a scale is something that has grown up in the last ten years and is therefore an issue about recent regulation not historic policies.
It is worth noting that many of the former building societies who demutualised found out that they could not compete with banks and therefore sold out to banks, examples being Cheltenham & Gloucester (Lloyds), Woolwich (Barclays), Bristol & West (Bank of Ireland). Bradford & Bingley and Northern Rock took a different approach to expansion, which was ill advised and liquidity risk should have been at the top of their agenda and that of their regulators.
It looks like the FSA ignored the issue from the time that it took over bank regulation in 1997.