6 comments on “Timmy elsewhere

  1. Anyone who hasn’t done so yet, look at a photo of Bankia’s headquarters.

    What where they thinking of? You couldn’t make it up? etc. etc.

  2. Because they did not have the brains to get on the boards of real banks but they hope they will have the political connections and the right opinions to get on the boards of State-run “banks”?

    cf. Will Hutton’s entire career.

  3. Australia up to the 1980s had a mixture of large, national banks and smaller, state and even local based banks and other bank-like financial institutions. These were a mixture of (state) government owned, and there were a lot of mutuals (building societies and credit unions) too. The state government owned banks were famous for doing boneheaded and extremely risky things, and the federal government eventually got tired of this and forced the state governments out of banking (despite having little constitutional justification for doing this). The mutuals mostly demutualised and got swallowed up by the larger banks after running out of capital for various reasons.

    Famously, though an institution named the “Pyramid Building Society” in Victoria offered returns to its depositors that they could not afford to pay, and went bust after a spectacular bank run.

    Yes, someone really thought it was a good idea to give the name “Pyramid” to a deposit taking institution. That it then lived up to its name was inevitable, I suppose.

  4. Michael, somehow (and as a lifelong Victorian, no less) I had never considered the absurdity of linking the name Pyramid to banking. Well done. You literally (and I know how to use it) made me laugh out loud.

    I was going to say we don’t need the example of Spanish banks, the Savings and Loan crisis in the US in the 80s was a good example of the dangers of locally controlled financial institutions. Of course, that only cost, officially, a billion dollars or so. Which was just a guess, so P.J. O’Rourke put it as “as much money as you can shake a stick at, plus the stick”.

    Ah, for the days when financial screwups were measured in billions not trillions…

  5. Of course the Pyramid Building Society managed to go bust without bringing down the entire Australian banking system, as did Rothwells in the 1980s.

    While I agree that in Australia State run banks were a good thing, I am not sure having a whole bunch of smaller banks absorbed into the big 4 is necessarily a good thing.

    The US system where banks can and do fail and the FDIC cleans up the mess is probably better from a systemic point of view. Lots of smaller banks which can be properly managed when they fail instead of large global institutions is probably more stable and better for the tax payer.

    If multinationals need massive finance they can use the bond markets or equity instead. I am not convinced we need huge global banks.

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