Monday, 5 August 2013

Ca.sino Roy.ale

The credit crunch eh? Casino banking, casino banking, mega bonuses, eh? Investment banking, eh? Know what I mean? Know what I mean? That Fred Goodwin, that Bob Diamond (see above), ring fence casino banking, put it at a remove from decent, ordinary banking, eh?


Via the power of wikipedia here’s a list of the British financial institutions that failed and/or where taken over due to the credit crunch:

The Catholic Building Society *
Alliance and Leicester
Derbyshire Building Society
Cheshire Building Society
Halifax Bank of Scotland
Bradford and Bingley
Barnsley Building Society
Northern Rock
London Scottish Bank
Scarborough Building Society
Dunfermline Building Society
Royal Bank of Scotland
Chesham Building Society

Do you see the pattern there? Here, here’s a clue, “actual or former building society” There, thought that might help.  Picking thru the list only one of the feck ups (RBS) had anything even remotely resembling a casino banking bit to its business meaning it was the exception to a broader rule, which is that the British credit crunch was about actual and former building societies destroying themselves doing too many shit mortgages, too many shit commercial property deals and a hearty soupcon of shite private equity deals as well, all  funded via too much of a reliance on short-term wholesale funding markets (as opposed to customer deposits)  End of.
Now a couple of things follow on from these dull, plodding, pedestrian facts. One, all the chat about casino banking and ring fencing, electrified or otherwise, distracts from the reality of what actually happened and whose to actual blame here i.e. whose balls should have been nailed to the wall years ago. Like to give one example, what in the fuckin’ name of fuckity fuck is Alan Dickinson doing sat on the board of the Nationwide given he was a senior corporate boy at RBS when it was pissing - what turned out to be taxpayer money - allova shit deals? I mean seriously, him being sat there is just wrong in all sorts of potentially libellous ways. What Alan DICKinson's continued career proves is that yer average punter has been spoonfed an account of why most people in Britain are worse off to the tune of hundreds of pounds a month that is (a) fundamentally wrong and (b) has let the guilty parties off the hook. 

The other, the one this post is intended to flag up, stems from the second thing which relates to the current Archbishop of Canterbury and the tosh he spoke about credit unions vs pay day lenders (plus the broader trite, shite about credit unions as an alternative to mainstream banking you get in the liberal press), which misses out two v.important, if dull facts. 1) Credit unions are teeny, like I mean seriously teeny; the total assets of the entire sector, at £961m in 2012, equate to a rounding error in the annual accounts of just one high street bank and 2) Britain used to have a reasonably chunky alternative to banks, they were called mutual building societies. 

Except now we don’t because institutionally, the credit crunch in Britain is actually about the failure of demutualisation. Remember that? You know it was that Thatcherite policy where people opened up savings accounts left, right and centre in the hope that the building societies they were saving with would demutualise, and hand them a fistful of free shares. And what did these wonderfully efficient were building societies became PLCs subsequently do? Pissed away what eventually turned out to be taxpayer money on shit deals is what.

What follows on from that is straightforward – yeah, yeah, credit unions are lovely, so good, change the law to encourage them. But, mutual societies are also lovely, have far more of a track record, and are already  much bigger. So if you seriously want to encourage more competition in high street banking, establish a powerful alternative run on a more prudent basis, less exploitation etc.,, etc.,  then encourage building societies as well even if its just to get former corporate bankers off their boards. 

And yes demutualisation was the the fault of the Tories

* New one on me

P.S. Aug 15th - Oops, I forgot about the Co-operative Bank, or more precisely its acquisition of the Britannia Building society, which has in turn knacked the Co-op, which is now having to sort out - wait for it, wait for it, can you guess?, yup, that's right - all the crap commercial property deals the Britannia did. Ring fence casino banking? Ring piece more like.

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