Ship of Fools: Ethical banking

Thread: Ethical banking - an oxymoron? Board: Oblivion / Ship of Fools.

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Posted by kentishmaid (# 4767) on :

Barclays bank have just been fined a record £230 million for manipulating the LIBOR inter-bank interest rates. Bob Diamond (the Chief Executive) has been forced to resign but there are now reports that he is getting a £22 million pay off (his annual salary is something like £17.5m), much to many people's fury. It has apparently been claimed that it would be too difficult to track down the individuals responsible for this mess and that prosecution for fraud (or whatever the offence would be) is unlikely to happen.

It is argued by many that this is a result of the "light-touch regulation" of banks which has been in place for the last few years and that tougher regulation is required. I agree with this and believe that there should be tougher penalties for fiascos such as the current one (an economist on Radio 4 suggested that there are more to come, possibly from banks overseas).

Given that banks appear to be incapable of behaving ethically under their own steam, what can be done to improve the situation and to keep our money safe?

Posted by Ender's Shadow (# 2272) on :

The central question that you must first define is 'what is the purpose of banking?'. Until you've done that, you're really progressing the issue.

The primary purpose in modern economies is two fold - to provide the plumbing that move money between people. This is the least controversial element.

The second element is the provision of a safe place for money to be kept for significant but short periods. The reality of this was bought home to me in the story of the farmers in India who every year bought pots and pans to be a store of value after the harvest; over the rest of the year they sold them to get money at a loss. The arrival of a trusted banking system was thus a major benefit.

The third element is to provide credit to 'worthy' recipients. This is where it starts to get messy; whilst the clearly worthy and the clearly inappropriate are easy to identify, the ones in the middle are always going to be controversial; to the people who made the investments the sub-prime mortgage market and the Spanish and Irish housing booms seemed like a good idea at the time - it's far to easy to indulge in 20/20 hindsight and shoot the people who made those calls.

The fourth area is where it gets far more complex. This is the whole investment banking / market making function, and it's this that has gone wrong in the Lehmans and LIBOR scandals. The easy - but wrong - answer is to suggest that banks just shouldn't be involved in these areas. The reason why this won't really work is that as vast holders of cash balances, they need to be able to balance their portfolios and risks; the alternative is face far higher charges for all the services arising from the functions above...

Posted by que sais-je (# 17185) on :

quote:
Originally posted by kentishmaid:

Given that banks appear to be incapable of behaving ethically under their own steam, what can be done to improve the situation and to keep our money safe?

I heard a talk arguing for a sharia law version of banking. As I understand it - and I'm no expert - instead of borrowing at interest rate a sharia bank can invest in your company/house etc. If the value goes up they get their share of the eventual profit, if down they share the loss.

Obviously a trivially simple explanation but I do get a sense that banks have no interest in the effects of their actions (beyond wanting a profit). Some way of linking them to the gain or loss of their customers might help.

Posted by Sioni Sais (# 5713) on :

quote:
Originally posted by Ender's Shadow:
The central question that you must first define is 'what is the purpose of banking?'. Until you've done that, you're really progressing the issue.

The primary purpose in modern economies is two fold - to provide the plumbing that move money between people. This is the least controversial element.

Can't argue with that, so long as the banks can be trusted to provide efficient and trustworthy software so that the money moves as it should, when it should.

quote:

The second element is the provision of a safe place for money to be kept for significant but short periods. The reality of this was bought home to me in the story of the farmers in India who every year bought pots and pans to be a store of value after the harvest; over the rest of the year they sold them to get money at a loss. The arrival of a trusted banking system was thus a major benefit.

Yes, a step up from the pawnbroker's shop is a good thing.

quote:

The third element is to provide credit to 'worthy' recipients. This is where it starts to get messy; whilst the clearly worthy and the clearly inappropriate are easy to identify, the ones in the middle are always going to be controversial; to the people who made the investments the sub-prime mortgage market and the Spanish and Irish housing booms seemed like a good idea at the time - it's far to easy to indulge in 20/20 hindsight and shoot the people who made those calls.

I think this part of banking and the market-making (below) got mixed up as the sums generated by sub-prime lending had an effect on the whole market.

quote:

The fourth area is where it gets far more complex. This is the whole investment banking / market making function, and it's this that has gone wrong in the Lehmans and LIBOR scandals. The easy - but wrong - answer is to suggest that banks just shouldn't be involved in these areas. The reason why this won't really work is that as vast holders of cash balances, they need to be able to balance their portfolios and risks; the alternative is face far higher charges for all the services arising from the functions above...

The problem seems to have been that so many market instruments were designed for one purpose but subsequently used for another, or used as stand-alone instruments, sometimes for vast sums but for minimal periods (not even overnight). In short, the market now serves only itself, and it shouldn't surprise any of us that staff in banks and other investment houses lose sight of the fundamental purpose of the financial markets, which isn't, believe it or not, to provide them with bonus pay!

Posted by leo (# 1458) on :

I'm glad this thread has started because i have been pondering opening one about this subject myself but feel that i don't know enough about it as i should.

The Church urban Fund has launched a study/discussion guide about this - I am probably not allowed to advertise but can provide a link to it for anyone who PMs me.

Posted by Philip Charles (# 618) on :

Caution, "a little knowledge" being shared.
Banks also create credit, effectively printing money. X deposits $1 with bank. Bank lends this $1 to Y. Y buys $1 of goods from X. X banks the $1, The bank again lends this $1 to Y who buys another $1 of goods from X who banks the $1 yet again ... and so on. Bank charges interest on $?? lent to Y. Bank become rich. Then the whole mess falls over. [Frown]

An economist posting about this would be interesting.
Phil.

Posted by kentishmaid (# 4767) on :

Yes, Leo - I feel similarly ignorant and wanted to see what more knowledgable shipmates could offer. It all looks like something of a mess from this particular lay-person's perspective!

Posted by Arminian (# 16607) on :

As an armchair economist of many years I find it fascinating that God's system for the Jews was so radically different from ours. Debts were cancelled at regular intervals. Usury was banned for Jews lending to other Jews. Jesus talked about lending and not expecting back. The money changers were thrown out of the temple. Not exactly a glowing endorsement of modern banking economics !

What God understood about loans which we appear to have forgotten, is that they rapidly become a means for the 'elite' to cream off interest for doing nothing, whilst gradually pulling down the productive capacity of the real economy.

Steve Keen is one professional economist that correctly predicted the 2007 crash, and has shredded the neo classical economic model 90% of economists work from. He is predicting 15-20 years of depression with the UK heading for a 'Minsky moment' when inflating asset prices goes in reverse. Contrary to what is being touted in the media, the UK is in a far worse situation than most are aware of. Our debt to GDP ratio is atrocious.

Banks create credit as part of making loans. Most people (and plenty of neo classical economists) believe that savers put money into banks, banks lend, and the credits and debts equal out. They do not. We have vastly more debt than we ever had savings. 97% of new money in the economy comes from bank loans, all of which come with a debt obligation with interest. This level of debt, which is rising in an almost exponential manner, is crippling world economies.

What has happened over the last few years is that 92% of all bank lending has gone into raising asset prices. Only 8% of bank lending has gone into making products. Essentially raising asset prices is a ponzi exercise. Eventually the prices collapse - boom and bust ! Austerity can never pay back the debt, because without more debt being taken on, there is no new money put into the economy ! As jobs are lost, welfare payments go up, taxes go down, wages decrease, and debts become even harder to pay back. The fact that most of this debt should never have been created in the first place against assets that were clearly not worth the prices they were pumped up to, has not been admitted by our politicians. Most are simply looking to retire onto the board of a bank when they leave politics.

Crazy but true. None of this is ethical or Biblical in any way.

Posted by quetzalcoatl (# 16740) on :

I suppose you could argue that this is a symptom of a corrupt and anarchic capitalism. The trouble then is, what we do we replace it with?

Nobody has really come up with an answer to that one. You can increase regulation, you can nationalize banks, you can create popular credit banks, and so on, but still, somehow, you have the feeling (OK, I have the feeling), that the same crooks will eventually take over.

I don't know what the solution is. Neither does anybody else, the politicians least of all, since many of them will not even be honest about the nature of this corruption, since they are implicated in it.

Posted by Ender's Shadow (# 2272) on :

quote:
Originally posted by Philip Charles:
Caution, "a little knowledge" being shared.
Banks also create credit, effectively printing money. X deposits $1 with bank. Bank lends this $1 to Y. Y buys $1 of goods from X. X banks the $1, The bank again lends this $1 to Y who buys another $1 of goods from X who banks the $1 yet again ... and so on. Bank charges interest on $?? lent to Y. Bank become rich. Then the whole mess falls over.
An economist posting about this would be interesting.
Phil.

Yes but...
At the simple level:
1) The banks have to pay X for the money he is depositing. Whilst in practice this may be merely reflected in 'free banking', it may equally be an interest payment that they make to X. Of course they charge Y a higher rate of interest...

2) Every time Y defaults, then the bank loses money. During good times defaults are low - but when the hard times come, the reserves built up during the good times will be called into use.

At a more complex level:
Banks are required to have a certain amount of capital / reserves as a proportion of their lending. The amount of reserves as a percentage of the loan is different for different borrowers, and one of the issues was that sovereign loans - at least to EU members - were assumed to be risk free. One of the more problematic issues in the present crisis is that governments are demanding that banks do two opposing things: increase their loans to small business, and increase their reserves as a percentage of their outstanding loans. In that context it is not a surprise that the supply of loans to small business - perceived as high risk - have been cut.

Overall problem: it is the nature of capitalist system that people will always try to 'game' the rules, stretching them to the limit as a way of making extra profit. To suggest that bankers are uniquely bad in doing this is farcical - almost everyone seeks to pay the least taxes etc. Now at times they have clearly crossed the line: this LIBOR scandal is an unambiguous wrong thing to do. However MOST of the financial crisis is as a result of people trying to take advantage of the rules, which has been the nature of the city for a very long time ( the Takeover Panel was founded in the 1968 as a result of city types taking advantage of the existing rules to make a killing). I suspect the only answer is to make the banks a lot smaller, so that they can be allowed to fail without catastrophic consequences, but it is important to realise that this isn't a cost free solution; interest rates on mortgages and to businesses will be higher because the implicit subsidy that exists as a result of 'too big to fail' will have gone. In that context allowing Lehmans to fail was a useful step toward encouraging a belief that the taxpayer won't bail them out.

Posted by Bean Sidhe (# 11823) on :

Long ago, pre 'Big Bang, I worked for a while in retail banking. We were in it to make a living, but equally took pleasure in the service we gave. What you might call 'ethical free enterprise', at least that's how it seemed. Since then, banks have apparently shifted to a place somewhere between a market stall and a brothel. What to do about it? Change how the world works? I dunno.

Posted by Crœsos (# 238) on :

quote:
Originally posted by kentishmaid:
Given that banks appear to be incapable of behaving ethically under their own steam, what can be done to improve the situation and to keep our money safe?

What I find most interesting about the various scandals in high finance is the way people act as if the problems of theft or fraud are novel, modern creations society has never had to deal with before. "It's complicated" is not an explanation or an excuse, it's an obfuscation.

Posted by Sioni Sais (# 5713) on :

quote:
Originally posted by Crœsos:

quote:
Originally posted by kentishmaid:
Given that banks appear to be incapable of behaving ethically under their own steam, what can be done to improve the situation and to keep our money safe?
What I find most interesting about the various scandals in high finance is the way people act as if the problems of theft or fraud are novel, modern creations society has never had to deal with before. "It's complicated" is not an explanation or an excuse, it's an obfuscation.

There was a time when the church opposed scripture that people could read and study for themselves, under the pretext that it was 'Too difficult' for the common herd to understand. Thank God for the printing press I say.

Maybe the mysteries of the City and Wall Street will be revealed as no more sophisticated than betting on the horses. Studying form isn't trivial but what is the difference between a person's credit rating and the form rating of a racehorse?

Posted by Doc Tor (# 9748) on :

My dad, who worked as an actuary and in the insurance business his whole working life tells me of a time where banks used to pay interest at 1% below base rate, and charged interest at 1% above base rate. The 2% margin between was what they ran the bank on.

It can, of course, be done. There's no need to pay savers nothing while charging even the cheapest small loans at double-digit percentage rates.

And why is it always only a small number of bank staff who break the rules and/or mis-sell products? I have to assume it's the same people fiddling the LIBOR rate who mis-sold mortagages, endowments, pensions, PPI, and business loans. You'd have thought they'd have been spotted by now and, I don't know, sacked or something.

Posted by Moo (# 107) on :

It appears to me that in the US, small local banks do what banks have traditionally done, while large nation-wide banks have undertaken all kinds of other financial activities in addition.

When my church needed a loan for emergency repairs, the local bank gave it to us without hesitation. I have the impression that a branch of a large nation-wide bank would not have been so helpful. When local businesses need a loan, at least some of the bank employees are probably familiar with the business.

Moo

Posted by Ender's Shadow (# 2272) on :

quote:
Originally posted by Doc Tor:
My dad, who worked as an actuary and in the insurance business his whole working life tells me of a time where banks used to pay interest at 1% below base rate, and charged interest at 1% above base rate. The 2% margin between was what they ran the bank on.

It can, of course, be done. There's no need to pay savers nothing while charging even the cheapest small loans at double-digit percentage rates.

Hmm - not at all sure about that. One of the major things that has occurred in the past 30 years or so is that the major companies have removed banks from doing a lot of the things that gave banks easy money; big companies don't leave money at the bank overnight, earning nothing, they get interest for it. They don't take loans from banks, but instead tap the bond market for themselves. As a result the old style banking is no longer subsidised by such relaxed attitudes. As a result loans to small companies will be more expensive...

Posted by kentishmaid (# 4767) on :

We have very few small local banks left in the UK, Moo. And most of the building societies, which many preferred, have either become banks or been absorbed into them. I'm not altogether convinced this has been a good thing.

Posted by kentishmaid (# 4767) on :

It has also just been announced that the inquiry into this debacle will definitely now not be a judicial one (which presumably would have more teeth etc) but a Parliamentary one. I am disappointed about this news as I fear it will just turn out to be a whitewash with a mere slap on the wrist being administered if anything.

Posted by Doc Tor (# 9748) on :

quote:
Originally posted by Ender's Shadow:

quote:
Originally posted by Doc Tor:
My dad, who worked as an actuary and in the insurance business his whole working life tells me of a time where banks used to pay interest at 1% below base rate, and charged interest at 1% above base rate. The 2% margin between was what they ran the bank on.

It can, of course, be done. There's no need to pay savers nothing while charging even the cheapest small loans at double-digit percentage rates.
Hmm - not at all sure about that. One of the major things that has occurred in the past 30 years or so is that the major companies have removed banks from doing a lot of the things that gave banks easy money; big companies don't leave money at the bank overnight, earning nothing, they get interest for it. They don't take loans from banks, but instead tap the bond market for themselves. As a result the old style banking is no longer subsidised by such relaxed attitudes. As a result loans to small companies will be more expensive...

So banks are being asked to lend less money with less capital. I fail to see why that's going to be a problem, unless you're an empire-building bank set on squeezing every last farthing out of their customers.

Oh, hang on...

Posted by ExclamationMark (# 14715) on :

quote:
Originally posted by kentishmaid:
We have very few small local banks left in the UK, Moo. And most of the building societies, which many preferred, have either become banks or been absorbed into them. I'm not altogether convinced this has been a good thing.

Every last one of the Building Societies who converted to banks went bust.

When I worked for a Buildi ng Society (15+ years ago), it was still ethically based and we'd only just started calling the money we'd made "profit" as opposed to "surplus."

Tbh the only real surprise of the most recent banking scandal was not that it went on (which a fair few people knew about anyway) but that it had remained hidden for so long. In addition, by keeping the enquiry within parliament we may never know what was known by which politicians.

Posted by Gramps49 (# 16378) on :

It has been said an ethical bank is a well regulated bank. Here in the US the banking system was under the Glass Steigall Act for 66 years. This Act kept commercial banks from using depositors' moneys from risky investments. When it was repealed in 1999 several congressmen opposed to the repeal warned that within ten years there would be a banking crisis not seen since the Great Depression.

Seems like we all need to go back to those tried and true laws again.

Posted by Arminian (# 16607) on :

The problem we have is that new money is introduced into the economy as debt (97%). Positive money have a campaign to reform this, and even got Mervin King to admit that their ideas should be investigated by the Parliamentary committee.

There are a growing number of economists who are challenging the classical neo economic model. You won't hear about it in the media, because banks have made sure that media groups don't talk about it. They have a lot of profits to loose if the present status quo is altered away from private banks creating credit. If we don't it will remain an unstable ponzi money system, prone to collapse and boom and bust as banks create more and more credit to gamble with on rising asset prices. (Which is why they aren't lending to small businesses - they make more from speculation, until it goes wrong then they ask for a bailout !).

http://www.positivemoney.org.uk/

I believe that debt cancellation and monetary reform is exactly in line with the system God used in Israel. There is a great deal in the Bible about the rich not using their power to exploit the poor. Far more than most subject the church traditionally bangs on about ! Its a shame that more Christians aren't involved in challenging the present system that represents a movement of unearned wealth from the poor to the elite (via usury).

Posted by tclune (# 7959) on :

I'm pretty sure an ethical banker is one who holds the door open for the widows and orphans that he is evicting.

--Tom Clune

Posted by Sober Preacher's Kid (# 12699) on :

In Canada we have never had "small community banks". Banks here have been national with branch-banking since the 1870's. Sure, they are pirates, but the Office of the Superintendent of Financial Institutions, the bank regulator, actually has teeth. A short while ago the Bank of Montreal tried to sell a "lifetime income product" which they said wasn't a life annuity, but was in substance a life annuity and was sold as one. Banks are barred from selling life insurance in branches.

Aside from competition matters, banks do not handle medical underwriting well at all. That can and will cost a customer or the bank money if it isn't done right. The OSFI shut the BMO's life income product down.

Canada never let go the ideals of old, traditional Scots banking.

Posted by Unreformed (# 17203) on :

While I do understand our modern economy is completely impossible without banking, there is something to the fact that almost every major world religion, at the very least, mildly dislikes lending money at interest.

The only thing you can do I guess is to your local bank or credit union. Develop some kind of human relationship at that institution. Screw the big, faceless corporations.

[ 06. July 2012, 19:06: Message edited by: Unreformed ]

Posted by Ender's Shadow (# 2272) on :

quote:
Originally posted by ExclamationMark:

quote:
Originally posted by kentishmaid:
We have very few small local banks left in the UK, Moo. And most of the building societies, which many preferred, have either become banks or been absorbed into them. I'm not altogether convinced this has been a good thing.
Every last one of the Building Societies who converted to banks went bust.

Humbug; most of them were taken over by banks and are thus still trading as part of that bank.

quote:
Originally posted by Doc Tor:

quote:
Originally posted by Ender's Shadow:

quote:
Originally posted by Doc Tor:
My dad, who worked as an actuary and in the insurance business his whole working life tells me of a time where banks used to pay interest at 1% below base rate, and charged interest at 1% above base rate. The 2% margin between was what they ran the bank on.

It can, of course, be done. There's no need to pay savers nothing while charging even the cheapest small loans at double-digit percentage rates.
Hmm - not at all sure about that. One of the major things that has occurred in the past 30 years or so is that the major companies have removed banks from doing a lot of the things that gave banks easy money; big companies don't leave money at the bank overnight, earning nothing, they get interest for it. They don't take loans from banks, but instead tap the bond market for themselves. As a result the old style banking is no longer subsidised by such relaxed attitudes. As a result loans to small companies will be more expensive...
So banks are being asked to lend less money with less capital. I fail to see why that's going to be a problem, unless you're an empire-building bank set on squeezing every last farthing out of their customers.

Oh, hang on...

Nope - the banks are being encouraged to lend MORE, especially to small businesses, who are consistently whinging that the banks won't lend to them; thus Vince Cable who as business secretary ought to know what he's talking about.

Posted by Doc Tor (# 9748) on :

quote:
Originally posted by Ender's Shadow:
Nope - the banks are being encouraged to lend MORE, especially to small businesses, who are consistently whinging that the banks won't lend to them; thus Vince Cable who as business secretary ought to know what he's talking about.

Actually yes. The banks are being asked to lend to small businesses who need small loans, not big businesses who need big loans.

That the banks are simply unable or unwilling to do so, despite the BoE throwing billions of pounds of QE at them shows not only the insanity of the plan ("this time, they'll do better!") but also that the banks can no longer carry out one of their core functions, which is to lend at interest to capital enterprises. They just don't know how to do it any more.

Which means it's time to find some lenders who do.

Posted by Sioni Sais (# 5713) on :

quote:
Originally posted by Ender's Shadow:

quote:
Originally posted by ExclamationMark:

quote:
Originally posted by kentishmaid:
We have very few small local banks left in the UK, Moo. And most of the building societies, which many preferred, have either become banks or been absorbed into them. I'm not altogether convinced this has been a good thing.
Every last one of the Building Societies who converted to banks went bust.
Humbug; most of them were taken over by banks and are thus still trading as part of that bank.

But they aren't trading as they did before! Banks have moved into property as never before and most of the mutual building societies have become shareholder-focused banks, most of which have now been taken over by the big banks.

When the property sector got into trouble, thanks to speculative lending against collateral thought to be 'as safe as houses', all the loans in that sector were affected and those that had specialised in the more speculative loans, like Northern Rock suffered most. Had they continued to spread their lending to businesses too the banks could have been in a better shape and, who knows, maybe the businesses too.

As for Vince Cable, he was probably one of the first to blow the whistle on the overheating credit market.

Posted by Eigon (# 4917) on :

I'd like to move across to our local credit union, but it only opens for two hours a week, while I'm at work. I'm stuck with Barclays because I can't see an ethical alternative that I can get to in person - I really don't want to move over to internet banking.

Posted by Boogie (# 13538) on :

I'm in the Co-operative bank which tries to make sure all its investments are ethical.

Posted by Ricardus (# 8757) on :

quote:
Originally posted by Unreformed:

The only thing you can do I guess is to your local bank or credit union. Develop some kind of human relationship at that institution. Screw the big, faceless corporations.

I don't know how it works in the US, but I used to work for a credit union in the UK. The credit union stored its members' money in a regular large commercial bank (in our case the Co-op). So if you bank with a credit union you're still banking with a bank, albeit indirectly.

Posted by Ender's Shadow (# 2272) on :

quote:
Originally posted by Ricardus:

quote:
Originally posted by Unreformed:

The only thing you can do I guess is to your local bank or credit union. Develop some kind of human relationship at that institution. Screw the big, faceless corporations.
I don't know how it works in the US, but I used to work for a credit union in the UK. The credit union stored its members' money in a regular large commercial bank (in our case the Co-op). So if you bank with a credit union you're still banking with a bank, albeit indirectly.

Only the difference between what the credit union has taken in and lent out. This is the same as any bank; all banks do the same and LIBOR is the rate at which banks lend the money they've got spare to each other.

Posted by Martin PC not & Ship's Biohazard (# 368) on :

Of course banking can be done ethically. If we are ethical. There's nothing wrong in banking per se. Nothing wrong in lending money at interest, buying shares in expectation of growth, in an open, transparent market, or even privately.

As there wouldn't have been among Jewish merchants, men of business from the beginning of the Jewish state. The law said you don't exploit your relatively needy brother or the poor in general AT ALL. But if your brother said lend me the money to buy a ship or a herd of camels or another hundred acres and I'll make it worth your while although there will be risks, what would have been wrong with that ?

If the Kingdom is to embrace the world, it will embrace banking, up to Jesus' return and possibly beyond.

Posted by Sioni Sais (# 5713) on :

quote:
Originally posted by Ricardus:

quote:
Originally posted by Unreformed:

The only thing you can do I guess is to your local bank or credit union. Develop some kind of human relationship at that institution. Screw the big, faceless corporations.
I don't know how it works in the US, but I used to work for a credit union in the UK. The credit union stored its members' money in a regular large commercial bank (in our case the Co-op). So if you bank with a credit union you're still banking with a bank, albeit indirectly.

It appears that credit unions are far more popular in the USA than in Britain, and there is the Credit Union National Association (CUNA), a nationwide advocacy and advisory body that runs CUNA Strategic Services (CSS). Because credit unions are bigger there than in Britain, they appear to have some collective clout when dealing with financial service providers.

I've read that the majority of Ireland's population blong to credit unions - does anyone have anything to add on their experience of them?

Posted by Sober Preacher's Kid (# 12699) on :

The same goes in Canada, credit unions cover a third of population, 10 million people. They don't deal with the Big 5 banks, they have their own "centrals", the Credit Union Central of Canada in the English-speaking provinces, and the Caisses Populaires Desjardins in Quebec.

Banks fall under strict federal regulation in Canada while credit unions are regulated provincially (don't ask me why). Thus they have every reason to keep separate.

Posted by Ender's Shadow (# 2272) on :

Possibly the issue is that the building society sector in the UK covered the same market segment as the credit unions of North America. The building societies mostly chose to demutualise in the 90s when given the chance, and most were then taken over by the banks. A few do still exist - Nationwide and Britannia most significantly have remained true to the mutual structure concept. And given that the Nationwide claims 16m members, that's a significant presence.

Credit unions are a lower level creature in the UK, being largely voluntary organisations with very small total asset sizes relatively speaking.

Posted by Doc Tor (# 9748) on :

quote:
Originally posted by Ender's Shadow:
The building societies mostly chose to demutualise in the 90s when given the chance, and most were then taken over by the banks.

That's a subtle re-writing of history.

You'd have been better off putting "The Conservative government of the time changed the rules to allow carpet-baggers to destroy the mutual building societies, then sell their free shares to the first predatory bank (run by Tory ministers' mates) that came along."

Posted by Sioni Sais (# 5713) on :

First Predatory Bank' has a certain ring to it. Sure there isn't one with that name already?

Thanks Doc Tor.

Posted by Lamb Chopped (# 5528) on :

I LIKE that! Truth in advertising at last.

UBB.classic^TM 6.5.0