Seumas Milne\’s Solution

This is really rather good actually:

Perhaps the best that can be hoped for in current circumstances is that Northern Rock is restored as the successful mutually-owned building society it was before the carpetbaggers arrrived.

And I\’ll have a pony while I\’m about it.

Of course, mutually owned means that the depositors own the business. So that if as and when there\’s a run on it, said depositors lose both their capital and their deposits. An excellent solution Seumas, quite excellent.

5 comments on “Seumas Milne\’s Solution

  1. But in this particular case, I think it might be illuminating. Am I right in saying that the Crock couldn’t have adopted the business model it did had it been a mutual?

    That it could not have been structured in the way it was and hence would not have been exposed to the inter-bank credit crunch?

  2. Mutual building socieities surely have the same level of deposit protection as banks, to wit now £35,000?

  3. Deposit protection is surely one of many factors when developing a loan model for high risk borrowers? Being a mutual adds a further factor — management culpability.

  4. “Being a mutual adds a further factor — management culpability”

    If the deposits are protected by the taxpayer, the depositors/owners surely would not care about the risks as long as they get their returns…

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