Building Societies - are they safe?

bristolleedsfan

baby_boomer wrote: »

Chelsea has already breached the terms of the scheme, and could have to pay back some of the cash it has received from the Bank..."

"Interesting" to see that Chelsea BS has increased its 1 Year fixed rate by 0.65% from a month ago.

http://www.thechelsea.co.uk/savings/invest_product_intro.html#fixed

baby_boomer

Every cloud has a silver lining

"Exact" mortgage assessment suggests that the BSs should perform their own "granular" mortgage analysis to take back to the "opaque" credit ratings agencies - presumably paying Exact for the privilege.

Exact know all about dodgy mortgages. Of their top three team, one worked "in a senior position" for HBoS and another for GMAC :rotfl:

baby_boomer

Telegraph - Adrian Coles of the BSA says that 7 societies' "discussions" with the Bank of England are NOT crisis talks

But it has now emerged that Newcastle BS was only saved from collapse in 2008 when other societies recapitalised it to the tune of £10 million through PIBs (the route they declined to take at Dunfermline in 2009).

IIRC Newcastle's management squandered £10s of millions in Iceland.

How was this all spun to members in the 2009 AGM literature?

We ended 2008 in a strong position for the future

"At the end of the year our members may have seen that the society issued £10m of PIBs which was a prudent measure to boost our capital position, and something I believe demonstrates confidence from investors in our organisation".

Hmmm. i.e. the other BSs wanted to avoid the humiliation of one of their number going under!

steady__eddie

Interesting article BUT........ "and Britannia has joined the Co-operative group. ".
That much of a foregone conclusion is it or have the vote riggers completed thier work already ? :rolleyes:
Ballot boxes do not close until the 25th.

Trollfever

Northern Wreck Part 2?

Chelsea seeks solution after breach of funding scheme rules

Chelsea Building Society is in negotiations with the Bank of England and Financial Services Authority (FSA) after breaching the terms that allow it to receive funding from the Government's liquidity scheme.



By Katherine Griffiths
Last Updated: 8:49PM BST 20 Apr 2009


The Cheltenham-based society faces difficulties over its use of the Bank's Special Liquidity Scheme (SLS), which provides funding for banks and building societies so that they can continue to operate and lend to customers.

http://www.telegraph.co.uk/finance/financetopics/recession/5189990/Chelsea-seeks-solution-after-breach-of-funding-scheme-rules.html

baby_boomer

When I sympathised with a Chelsea administrator the other day about the unfortunate Icelandic losses, she said that the management had assured staff that they had a plan!

The Whistleblower at the FSA who went to Vince Cable points the finger at poor FSA management of the sector

"......Low calibre FSA management is perhaps the single biggest factor in this
disaster. The key individuals in Retail Firms Division management from 2005 to
date have no background in deposit-taking. Former director Sarah Wilson had
experience in insurance and current director Sheila Nicoll was an IFA. Similarly,
Julia Dunn, who for the past three years has been head of the department
responsible for supervising all the building societies besides Nationwide
Britannia and Yorkshire, came from FSA Enforcement and has no
qualifications or professional experience in deposit taking or retail financial
services came from FSA Enforcement and has no
qualifications or professional experience in deposit taking or retail financial
services."

The Whistleblower singles out Principality, West Brom & Newcastle as the societies most likely to mirror Dunfermline.

baby_boomer

Societies sign up to the government's Homeowner Mortgage Support Scheme to help borrowers in difficulty

Voluntarily, I'm sure, and nothing to do with the fact that the seven top societies need the government to alter the terms of their borrowing cash from the Special Liquidity Scheme.

Bernard_Coleslaw

baby_boomer wrote: »

Societies sign up to the government's Homeowner Mortgage Support Scheme to help borrowers in difficulty

Voluntarily, I'm sure, and nothing to do with the fact that the seven top societies need the government to alter the terms of their borrowing cash from the Special Liquidity Scheme.

Actually, that story seems to suggest that societies are doing their own thing independently and not signing up to the Government's plan. That's how I read it, anyway.

MiserlyMartin

baby_boomer wrote: »

## - Well put. Except that it's taxpayers AND savers. The strain this puts on interest rates [because of the FSCS levy] will last for years.

I suppose this is the reason Nationwide's savings rates are now pathetic.

arcadia00

I don't quite get this, so I find it is extrememly worrying. Ratings agencies are projecting a 40% drop top to bottom in houses prices and say that in such a scenario the mutual movement is worth (E) junk bond status. (Some banks will be even worse off I'd have to imagine.)

Excuse me, but it is very very easy to plot out trend lines to a 50% drop, top to bottom in house prices.

Are they saying when property gets down to 50% levels all these places are teetering on becoming worthless zombies. We cant bail out a simultanous concerted collapse and we couldn't guarantee depositors cash under a complete systemic collapse. But if all it depends on is a 50% house price crash then its practically odds on. That's what I don't get.

Seriously, are things survivable for depositors in banks and mutuals under a 50% drop in house prices?