Credit crunch update...

[mrph]

Bradford & Bingley is to be nationalised - "the Treasury will almost instantaneously sell to a bank or a number of banks".

According to the BBC, this means that every building society floated on the stock market in the past two decades will have collapsed or been sold to a conventional bank. Something about that fact seems a little bit depressing.

Comments

[http://users.livejournal.com/_gh0st_/]

agh! cheers for the news flash. Our mortgage is with Mortgage Express who are B&B. wonder what'll happen!

[livingarmchair.livejournal.com]

I think the mortgage business is what is being nationalised, as this is where the toxic debt is. The other areas will be sold off.

[pope-ant.livejournal.com]

I doubt they will fail.
IMHO, they are still mutual, so unless they have been badly mannaged (significantly more lending than deposits, or a high proportion of very risky lending) they should be big enough to ride it out.

That said - who knows :-).

[mimmimmim.livejournal.com]

Suffering for greed, perhaps? If they'd stayed mutual, maybe they wouldn't have got in quite such a mess.

That said, there have been small building societies taken over by banks in the past couple of weeks - they've been on the verge of going to the wall and larger, stable companies have been leaned on to take them over before they collapse.

[pope-ant.livejournal.com]

AFAIK, The 2 small building societies merged with (were taken over by) the Nationwide - which is still mutual (a building society not a bank).

[mimmimmim.livejournal.com]

Yeah, I was confused by that. I thought they were a bank now.

[zotz]

Not terribly surprising, though. It was always a short-termist strategy.

[pope-ant.livejournal.com]

I suspect that the reason the demutualised societies have failed is that it was only the smaller societies that fell victim to 'carpet bagging' and hence demutualisation - because they are still small they fell. Nationwide (and some others) was much bigger than average and this bought it enough time to ammend its rules before the carpet baggers got it. It now has rules to protect it from such action (up to a point).

[hex61.livejournal.com]

Hmmm... I'm not sure I understand the structure of a "building society" but they look a lot like Savings and Loans we had in the US and which exploded a while back for us.

[mhw.livejournal.com]

Similar kind of thing, yes. Basically they started out as mortgage companies, then more recently have diversified into being pesudobanks.

[mhw.livejournal.com]

*shrug* Economies are turbulent objects, prone to all kinds of boom and bust, Adam Smith notwithstanding.