Dunfermline unathletic
So Britain’s 12th largest building society goes bust – and the chairman complains that the chancellor isn’t bailing it out.
Stunning! If, as some suggest, the Dunfermline Building Society is a victim of reckless lending, what possible obligation does Mr Darling have to bail it out?
I’m not suggesting foul play, but I am suggesting that unacceptable risks were taken and that the taxpayer should not be involved in trying to shore up failed institutions.
It’s been known that the Dunfermline Building Society was going bust for several weeks. But there’s been no Northern Rock-style run on it, and that’s because the savers have confidence in the government’s pledge to make good their losses.
The question we are bound to ask is: how many more Dunfermlines are there? No-one knows. We are, I fear, still at the beginning of the beginning.
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Jon – as Nationwide are laying off hundreds of staff, is this a case of out of the frying pan?
I suppose the view that the taxpayer should call a halt to shoring-up failed institutions is a reasonable policy, but it’s not entirely black & white.
Shouldn’t the Government identify businesses that are systemic and critical, i.e. those which might bring the country to a halt or cause a crisis (e.g. riots) if they failed, commit to saving those businesses if necessary and say loud and clear that the rest will have to sort themselves out?
It’s about time they did that in my view, as everybody’s been getting bail-out happy recently…
What all this must be doing is to be giving voters in Scotland pause for thought; particularly those voters inclined towards dissolving the Union.
An independent Scotland would have had nowhere near the means to rescue the big Scottish banks – as the UK Government has.
True the Scottish Government could not have afforded to bail out RBS or HBoS, however they had been willing to put a package in place to help Dunfermline survive for now. This however was vetoed by the treasury.
Darling’s comments about the Dunfermline never being profitable enough to be worth bailing out send a bad message in my view. It appears that if you can make a huge profit for a few years, by any methods, and then require a bail-out you will get it. However a modest building society with no US sub-prime assets can simply be lost.
Nationwide will be getting a great deal if they pick up the profitable parts of this.
I can assure Simon Gardner that voters in Scotland inclined towards independence – that’s me – are not in the least bit phased! It will take more than a financial cockup to convince most of us we shouldn’t look for independence.
I would like to think if we had been independent we may have handled the situation better or perhaps even been big enough to live with the consequences.
Scotland is not only made up of finacial services.
I can’t help but think that this is a casualty of larger banks calling in their debts in order to 0 their balance sheet and get out of the clutches of the government.
Perhaps an approach would be:
1) Force the banks to freeze the interest owed by small businesses.
2) Allow small businesses to take out a loan from the government to pay back the stupid banks. This allows the banks to 0 their balance sheets.
2a) The loan from the government should be 0 interest for the next, say 5 years allowing the businesses to at least not go under.
3) Ban short-selling and hedge funds.
4) Regulate very tightly the markets such that any new financial instruments are not allowed unless they have been assessed.
5) Institute a MargretThatcher day whereby during that holiday people are reminded of the catastrophy of the so-called free markets.
We should never have bailed out, in toto, the failed banks. We shouldn’t do so now. We need a “Good Bank” to assume savings accounts and loan books. Everything else is for the shareholders to sort out and sue about.
There is no alternative to properly regulated but free markets. However, state subsidy isn’t freedom and is a chronic waste of taxpayers’ money.
We shouldn’t have bailed out the banks. It set a dangerous precedent with the UK government holding the disastrous debt for generations of UK taxpayers to try and pay off.
The UK’s a debt junkie and seriously needs to go cold turkey, but all I see Gordon wanting to do is encourage more debt.
After such a massive boom, surely we need a massive bust! All these expensive attempts to prevent the bust will just make it worse in the long time.
Debt junkie UK needs to stop people taking on silly amounts of credit. And as well as jobs going and companies closing, the house prices have to sink to realistic levels again.
We shouldn’t have bailed out the banks. It set a dangerous precedent with the UK government holding the disastrous debt for generations of UK taxpayers to try and pay off.
The UK’s a debt junkie and seriously needs to go cold turkey, but all I see Gordon wanting to do is encourage more debt.
After such a massive boom, surely we need a massive bust! All these expensive attempts to prevent the bust will just make it worse in the long time.
Debt junkie UK needs to stop people taking on silly amounts of credit. And as well as jobs going and companies closing, the house prices have to sink to realistic levels again.
P.S. – Sorry, forgot to tell you great post!
The implications for social housing in the Dunfermline area interest me. In Manchester the city council imposed PFI schemes on residents in council housing. Initially there was going to be a vote, but when it became clear that residents would vote against, the vote idea was scrapped and local councillors decided what was best instead (guess what? A PFI). Now the residents are all left in the lurch, as it will be likely be years before any private financed can be found, if ever. Already bathrooms and kitchens don’t meet EU minimum standards.