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Sensible Mutuals Have To Pay For B&B
Oblivion
Posts: 20,248 Forumite
I know it is all part of the guarantee system, but when I read in this BBC item that the well run mutual building societies will have to fork out money to pay for the Bradford & Bingley fiasco, it makes my blood boil.
It will most probably result in the mutuals having to reduce interest rates to depositors, so not only do we savers suffer through the burden on tax-payers, we also lose out on interest income even though we've chosen a safe pair of hands to deposit our money with! :mad: :mad: :mad:
Dave.
It will most probably result in the mutuals having to reduce interest rates to depositors, so not only do we savers suffer through the burden on tax-payers, we also lose out on interest income even though we've chosen a safe pair of hands to deposit our money with! :mad: :mad: :mad:
Dave.
... Dave
Happily retired and enjoying my 14th year of leisure
I am cleverly disguised as a responsible adult.
Bring me sunshine in your smile
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Comments
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I know it is all part of the guarantee system, but when I read in this BBC item that the well run mutual building societies will have to fork out money to pay for the Bradford & Bingley fiasco, it makes my blood boil.
Its not just other B&Bs. It is also IFAs, insurance companies and all other FSA authorised firms.
The FSCS has always been a system where the good pay for the bad.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
The likes of the Cheshire and Derbyshire were hardly sensible. Even Nationwide were utterly foolish to buy Portman at the height of the bubble.
The horse-trading and shenanigans of building societies are not in the public domain but that doesn't mean they don't exist. I'm sure there are sensible building societies but then the likes of Lloyds, HSBC, Standard Chartered, Close Bros and plenty of other publicly listed banks have also been sensible and they are paying too."The state is the great fiction by which everybody seeks to live at the expense of everybody else." -- Frederic Bastiat, 1848.0 -
But all the surviving banks and building societies benefit from the scheme too - lots of small savers wouldn't save at all if there wasn't a safety net in place.0
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The likes of the Cheshire and Derbyshire were hardly sensible. Even Nationwide were utterly foolish to buy Portman at the height of the bubble.
The horse-trading and shenanigans of building societies are not in the public domain but that doesn't mean they don't exist. I'm sure there are sensible building societies but then the likes of Lloyds, HSBC, Standard Chartered, Close Bros and plenty of other publicly listed banks have also been sensible and they are paying too.
My original post was about those mutual building societies that have been sensible. I think there needs to be a complete restructuring of the FSCS guarantee system to rank financial institutions according to their business model and potential risk exposure, in arriving at their financial commitment to the guarantee scheme.
I would hope this is something the government will take on board in any future review of financial regulation.
Dave.... DaveHappily retired and enjoying my 14th year of leisureI am cleverly disguised as a responsible adult.Bring me sunshine in your smile0 -
I doubt it, Gordon (is a moron) Brown and Alistair (Who did that to my eyebrows) Darling, have NFI how to deal with this messLiquidity is when you look at your investment portfolio and **** your pants0
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Its not just other B&Bs. It is also IFAs, insurance companies and all other FSA authorised firms.
The FSCS has always been a system where the good pay for the bad.
I thought the FSCS worked in groups and sub-groups etc...So an IFA in investment isn't bailing out a BS in Deposits....
You IFA's must be earning mega bucks if their gonna tap you personally for the £20billion :rotfl:0 -
Life is like that.
When you buy insurance, you are paying premiums for people who make claims. Does that make the insurance wrong?0 -
Its divided by amount of depositors money they are taking. I guess some large banks who dont deal so much in deposits will pay less for their size then a bs which has to have alot of security before they can lend afaik0
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Life is like that.
When you buy insurance, you are paying premiums for people who make claims. Does that make the insurance wrong?
Not a strong argument IMHO Ray ... but perhaps an interesting analogy as it pans out. When you buy insurance you are subject to a risk analysis based on things like postcode, past claims, security measures in place etc. So if you are perceived as high risk, you pay more.
My argument is that financial institutions should have their liability to the FSCS guarantee scheme based on a similar assessment of risk. You know it makes sense
Dave.... DaveHappily retired and enjoying my 14th year of leisureI am cleverly disguised as a responsible adult.Bring me sunshine in your smile0 -
It would be complicated and messy, but I think you might have something there. A formula that links their liability to contribute to FSCS inversely to the proportion of their lending backed up by firm customer deposits would be a start. Things like >90% mortgages, self-certified mortages, and buy-to-let lending could also be factored in.
It probably won't happen though. For a start our economy is now so dependent on financial services (we've got precious little else left) that our illustrious government is completely s**t-scared to rock that boat. Secondly the civil service is right up the a**e of the financial sector and vice-versa in an intricately incestuous old boy network. So the City has plenty of friends in high places to protect it from measures that it doesn't want (it seems that the USA is similar in this respect). That is a major factor behind the 'light touch' regulatory regime that has helped to get us into this shambles in the first place in my opinion. When Brown was persuaded to dilute the Bank of England's powers and hand much of it over to the ridiculous and totally inffectual quango called the FSA, they saw him coming !No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0
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