It\’s the political mutuals going down again

In France, the authorities are racing to avoid having to rescue Caisse Centrale du Credit Immobilier (3CIF) after Moody’s downgraded the mortgage lender last week, warning it could become totally reliant on taxpayer support within months.

The lender is one of France’s largest mortgage providers and is owned by a collection of local authorities and mutuals, giving it implicit government support.

We\’ve all sorts telling us that we shouldn\’t have shareholder banks, that it should be mutuals and local politicals running the banking system.

In Spain it\’s the cajas, which are exactly that, which are falling over. In France it\’s the bit which is mutuals and politicals which is falling over…..

Even at the very best this isn\’ty really an advertisement for running the British banking system through mutuals and politicals, is it?

Do recall what the free market argument actually is. Not that markets are perfect, just that other organisational systems can be even worse.

5 thoughts on “It\’s the political mutuals going down again”

  1. Here we are a little upset that Hollande is telling us we need to go to an EU rescue for our banks (cajas really).

    Rajoy got the tone right by pointing out that we are getting external auditors (audits have been done but …) to have another go. Transparency being the key. He gently suggested (as is his way) that perhaps other European heads of gov. should do the same. Looks like he wasn’t far off the mark.

    I fear Hollande is another Zapatero promises he can’t keep, fear of structural reform, inability to tell it as it is…

  2. I’d say that the performance of the demutualized sector in the UK (Northern Rock, Bradford & Bingley) is a pretty good advert for the Building Societies (notwithstanding the Dunfermline’s losses).

  3. You seem to have a typo in your second line. ‘running’ should have one ‘n’ and an ‘i’ in it.

  4. Hang on – are you making the capitalist / free market mistake here? Government ownership is non-capitalist not non-free market.

    Admittedly, giving politicians easy influence over a sizeable %age of the organisation in any sector is likely to lead to even more distortion of the market than their ability to pass laws but it definitely distorts the ownership models.

  5. PaulB,

    You wrote: “I’d say that the performance of the demutualized sector in the UK (Northern Rock, Bradford & Bingley) is a pretty good advert for the Building Societies (notwithstanding the Dunfermline’s losses).”

    It’s not whether Northern Rock and B & B were mutual or not which made the difference to their susceptibility to abnormal economic factors, (which are almost inevitable if we wait long enough, ) but the rules which governed mutuals.

    It’s a rule thing, not a company structure thing.

    Quite what the rules should be….? That’s a different question.

Leave a Reply

Your email address will not be published. Required fields are marked *