David Burbage’s weblog

Politics in the Royal Borough of Windsor & Maidenhead

  • About David Burbage

    David Burbage MBE was Leader of the Royal Borough of Windsor and Maidenhead Council from 2007-2016. This blog : Promoted by Geoff Hill on behalf of David Burbage and all other Windsor and Maidenhead Conservative candidates, all of 2 Castle End Farm, Ruscombe, Berkshire RG10 9XQ
  • Meta

Isn’t Bradford and Bingley a safe, ancient Building Society?

Posted by davidburbage on September 28, 2008

Of course it isn’t, it demutualised.

I remember voting against the Halifax demutualisation, thinking that the building society model was better for those involved as the savings and lendings were well integrated and balanced each other out. And although I didn’t mind being a shareholder of a bank rather than a member of the building society, there were, as the fat bloke on the Nationwide ads loves to talk about, requirements to make a profit etc that were not in the building society model.

Only about 10% voted against – so I got the shares (long since sold fortunately).

I also remember being told that to convert to a bank would mean greater access to capital markets, greater flexibility with respect of the ‘products’ that could be offered, greater freedom to use the bank’s capital assets for the benefit of the shareholders.

Don’t get me wrong, I’m 100% capitalist – but if a borrowing system had worked for a hundred years or more, it must require a deal of proof in order to change it.

(I’m aware that some building societies are also in trouble as you can see here but as it also states

Britannia’s vulnerability to the credit squeeze is rare among mutuals )

What really bugs me is that the Government think I’m the best person to pay for the indebtedness of others, who can’t pay what they borrowed. Why should that be a taxpayer debt?


One Response to “Isn’t Bradford and Bingley a safe, ancient Building Society?”

  1. Neil said

    I don’t think demutualisation is the real problem – we don’t want to go back to the days when you had to pick a BS and save with them for ages to get on their mortgage waiting list, effectively meaning no competition after the customer makes the initial choice.

    The problem is the behaviour of the stock market.

    A bank with private shareholders can still have a responsible lending model. But once the stock market is let loose, investors demand no end to growth, so the barrel has to be scraped lower and lower every year: dodgy geezers lent money without verification, staff put under pressure, call centres offshored, customer service cut, to prevent the shareholders dumping the stock.

    Corporate shareholders need to have their wings clipped. They never allow a stable, cash-rich company to just roll along making adequate profits and keeping their customers and employees happy – they are just emptying the employees, cash and goodwill out of one company after another. They have power without responsibility.

    Also I think you are being a bit unfair on the borrowers. Most of them have not defaulted yet, and most still have equity in their houses. What has happened is that the lenders have themselves borrowed the money at LIBOR-based rates, can’t borrow it any more and are thus not able to push more dodgy loans to gullible Joe and Jane Public. Their P&L is heavily front-loaded and this makes them look bad in the eyes of their shareholders.

    They are asking for Government money so that they can keep shovelling it into their failed business model. These banksters are certainly not about to use any bail-out cash (should Brown go down the same route as Paulson) to help out their customers. In fact I think there would be far more suppport (here and in the US) for a programme to compensate borrowers who have been fleeced by greedy lenders – though I agree that this would be just as bad from the “moral hazard” point of view.

    Personally I think the US bail-out is Iraq redux – “accept this now or your homes and jobs will be lost in 45 minutes!”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: