Dunfermline – not done spinning

Listening to the Chancellor he apparently needs to be careful when bailing out an institution that just loses a few tens of millions, whereas he was remarkably careless when bailing out RBS, an institution that lost £24 billion last year.

Beneath all that spin, it sounds as if the taxpayer is still going to end up owning or guranteeing the bad loans and poor investments Dunfermline has made. The poor old taxpayer may have to to carry the can, so it is just spin and positioning. Attempts to make out they lost in US sub prime seem to be rebounding, as it looks as if the losses have come from British business made by a Scottish institution under the not very watchful eye of the British Regulator.

PS: It is unusual for third parties to be discussing in public what to do with a Building Society or other institution against the wishes of that institution and without talking to the Chairman of it first. The government needs to make sure that what it is saying and doing either has approval of the members of the Society or is covered by some regulatory power they intend to use. This would be best stated openly so the Institution itself understands what is going on and can then co-operate with the regulator.

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20 Comments

  1. Demetrius
    Posted March 29, 2009 at 1:15 pm | Permalink

    The king sits in Dumferling toune,
    Drinking the blude-reid wine:
    “O whar will I get guid sailor,
    To sail this schip of mine?”

    Up and spak an eldern knicht,
    Sat at the kings richt kne:
    “Sir Patrick Spence is the best sailor
    That sails upon the se.”

    The king has written a braid letter,
    And signd it wi his hand,
    And sent it to Sir Patrick Spence,
    Was walking on the sand.

    The first line that Sir Patrick red,
    A loud lauch lauched he;
    The next line that Sir Patrick red,
    The teir blinded his ee.

    “O wha is this has don this deid,
    This ill deid don to me,
    To send me out this time o’ the yeir,
    To sail upon the se!

    “Mak hast, mak haste, my mirry men all,
    Our guid schip sails the morne:”
    “O say na sae, my master deir,
    For I feir a deadlie storme.

    “Late late yestreen I saw the new moone,
    Wi the auld moone in hir arme,
    And I feir, I feir, my deir master,
    That we will cum to harme.”

    O our Scots nobles wer richt laith
    To weet their cork-heild schoone;
    Bot lang owre a’ the play wer playd,
    Thair hats they swam aboone.

    O lang, lang may their ladies sit,
    Wi thair fans into their hand,
    Or eir they se Sir Patrick Spence
    Cum sailing to the land.

    O lang, lang may the ladies stand,
    Wi thair gold kems in their hair,
    Waiting for thair ain deir lords,
    For they’ll se thame na mair.

    Haf owre, haf owre to Aberdour,
    It’s fiftie fadom deip,
    And thair lies guid Sir Patrick Spence,
    Wi the Scots lords at his feit.

  2. subrosa
    Posted March 29, 2009 at 1:43 pm | Permalink

    Mr Redwood, you know this decision is more political than business sense surely. Did you see the Chairman of the Dunfermline on Scottish Politics Show at 12.30? I expect not as yet.

    Even someone as simple as me knows selling it off and Westminster taking the ‘toxic debts’ is a worse move for the taxpayer than shoring it up in the short term.

  3. Johnny Norfolk
    Posted March 29, 2009 at 1:50 pm | Permalink

    Its strange how many of these problems are Scottish based.

    RBS. Bos. Dunfirmlin, Brown,Darling, the list is endless.

    They have sure stitched up England.

  4. Stonemason
    Posted March 29, 2009 at 2:01 pm | Permalink

    Is it not time the irresponsible were allowed to fail, it might focus some minds.

    My back is becoming very bent under the weight of Brown and chums largesse.

  5. Steven_L
    Posted March 29, 2009 at 3:44 pm | Permalink

    Guaranteeing what money to whom? Does this mean we’re bailing out people that had saved over and above the £50,000 retail deposit protection threshold in one institution? People who put all their eggs in one basket?

    I wonder how many Scottish Labour MP’s had deposits over £50k in there – we should be told!

  6. Guy Herbert
    Posted March 29, 2009 at 3:54 pm | Permalink

    Is there any way the PM can find to blame the SNP for this? If so, that is what will happen, regardless of what the facts are.

    “Comrades …. do you know who is responsible for this? Do
    you know the enemy who has come in the night and overthrown our windmill? SNOWBALL!”

  7. Faux Cul
    Posted March 29, 2009 at 4:54 pm | Permalink

    Dear Mr Redwood, please engage brain before writing.

    Did you see or indeed can you see the interview with the Chairman of The Dunfermline Building Society and the excuse for a Viceroy, whathisname Murphy.

    Murphy was passing on the disinformation that The DBS was exposed to toxic US debt. Of course it is not.

    They asked for a loan so they could work their way out of their problems, which the Chairman still believed was possible. Their problem is not this years results abut next years one where they anticipating problems.

    Ther vis oney on the table still from the Scottish Government but it seems that some people in Whitehall don’t want that deal to be considered, at least not in public!

    Brown charges in, with Darling on his coat tails and suddenly the DBS is being sold without The Chairman being consulted. This is a Mutual Building Society and the shareholders have not been consulted.

    This stinks to the rafters.

    I wonder if Brown has been having drinks with the Chairman or MD of the company which will be allowed to buy the DBS? Brown has form here. There 4 interested parties and unless the bidders are knobled there should be 4 bids. Not a Building Society out for the count.

    Get a hold of the Scottish version of the Politics show and then make up your mind

    Reply: Try reading my piece. I said it was British assets not US ones. The fact is the Building Society needs government financial help. If it didn’t they would just say they do not need any assistance and demand the government retracts its comments. If they could borrow what they need from the private sector and meet the capital and other requirements, again you would expect them to say so and deny they needed government assistance.
    There is an important argument to be had over how much government assistance and what form it should take. I have not expressed a view on that, as I need convincing that more taxpayers money be put at risk. You may be right that the government’s plan is wrong. Of course the mutual owners should be consulted on what is to happen to their Society. They might also like to consider putting up the money themselves that the Society needs if they want it to stay independent.
    I would love the Society to turn round and say it doesn’t need a penny from the taxpayer. That would put an end to it, but the Chairman has been unprepared to say that in the interviews I have seen.

    • Faux Cul
      Posted March 29, 2009 at 8:56 pm | Permalink

      Repl

      I did not say you had said that the DBS was exposed to US debt, it was the Vice Roy, James Murphy who said so.

      As a mutual can they borrow from the market?

      I repeat, get a hold of the interview on The Scottish Politics Show.

      • Faux Cul
        Posted March 29, 2009 at 8:59 pm | Permalink

        I forgot

        To my knowledge The Chairman has given no interviews until today about the Treasury/ Scottish Office/ BoE (?) rescue talks.

        Maybe you have access to televised interviews that we do not.

        Reply They are the ones I have seen and was talking about.

  8. mikestallard
    Posted March 29, 2009 at 6:56 pm | Permalink

    “To comprehend the scale of the sickening task awaiting George Osborne if he becomes chancellor, consider the following. If he were to raise VAT to 25%, double corporation tax, close the Foreign Office, cancel all international aid, disband the army and the police, release all prisoners, close every school and abolish unemployment benefit he would still be unable to close the gulf between what the UK government spends and what it raises in taxes.”
    Fraser Nelson on p.10 of this week’s Spectator.
    And yet they still have money to buy votes in Scotland?

  9. Stuart Fairney
    Posted March 29, 2009 at 6:57 pm | Permalink

    The (in my view) over-rated Mr Cable was again on TV today, giving his version of why the Dunfermline sank. He seemed to think that the government banking guarantee scheme (i.e. where they all paid some cash as part of a super-insurance type deal) was the problem. He didn’t say how much Dunfermline had to pay, or if this amount of money was the proverbial straw that broke the camel’s back.

    I am simply bewildered that news editors seem to see him as (a) the voice of opposition and (b) the great panjandrum of financial affairs.

    I cannot remember seeing anyone saying “let them fail” or even substantially questioning the government line (except the aforesaid MP and his proposals are bizarre).

    JR, as we are in a televisual age, is there any chance of putting up this blog on youtube? I’m a political devotee, but most of my fiiends are not and I really think you could reach a wider audience. If the BBC won’t broadcast you, to hell with them, Do a Hannan!

    Reply: I would need help to organise that. This takes up all the time I have before normal office hours already. I am happy to invent the phrases and provide the analysis. I am currently trying to organise video of my Commons speeches, to see if they are more interesting to more people than the blog articles.I do make a number of speeches which might be of interest if someone filmed them. Some have been. How would I go about “putting the blog on You tube”? How much time would that take up to do it?

    • Brian Tomkinson
      Posted March 29, 2009 at 9:09 pm | Permalink

      Why not ask David Cameron how he produces Webcameron?

      REPLY:The Leader of the Conservative party has access to resources I do not have, and rightly so.

    • APL
      Posted March 30, 2009 at 6:59 am | Permalink

      Stuart Fairney: ” as we are in a televisual age, is there any chance of putting up this blog on youtube?”

      No disrespect intended to our host, I do however think that everyone is getting a little carried away with Daniel Hannan’s overnight success.

      I think there were particular circumstances involved on that occasion. In fact Hannan said much the same when interviewed on the TV. A lot of people have noticed that Brown never listens, never answers the question, just spouts the same old drivel, ‘getting on with the job’ [of destroying the country], so when Hannan stood up and told Brown to his face exactly what a lot of people knew to be true, it was a sensation.

      In the US they have CSPAN, in the UK we have the pathetic Parliament Channel. That’s where the effort should be.

      Perhaps when we have clawed back the expenses related to pornographic films from (various MPs mentioned in cases currently subject to investigation) Maybe then there would be enough money to improve the BBC (spit) Parliament channel!

      By the way, are we supposed to accept that Jackie Smiths husband has paid back the money and that is that?

      If an MP pays something back, he knows it was dishonest to take it in the first place( words left out and changed – the individual may argue it was ill judged but not against the rules and therefore in his view not dishonest-ed).

      Where else might a suspect get an opportunity to repay and walk free? (sentence changed-ed: there is an issue of does a dubious expense claim ever become theft?)

      Perhaps we should get the home secretary on the case?

  10. Adrian Peirson
    Posted March 29, 2009 at 8:21 pm | Permalink

    Gordon keeps telling us we need to stimulate the economy, why not let the Banks fail, give people the keys to their Houses, cancel all mortgage debt, credit card debts and loans in these companies. Let them keep their Homes, their Cars and businesses.
    The Only people that will suffer are a few Top executive Bank managers.
    The person that loses out on his pension will be compensated by having his / her mortgage paid off.
    this frees up around £500 per month for the average family, no mortgage to pay, no car loan oir credit card.

    In addition, give every one in council homes, ownership,

    More money for people to spend from their earnings ( because I’m also thinking of scrapping income tax )

    This will stimulate the economy, New ( hopefully more sensible ) banks will spring up in their Place.

    I would have thought the Socialists in power would have jumped at an opportunity to distribute wealth from the Bankers back down to the Masses, but no, they seem to be helping the Bankers instead.

    Hit the Reset Button and let natural selection prevail, just like it should.

    This current situation has been manipulated into being by wealthy and powerfull forces.

    • Lola
      Posted March 29, 2009 at 9:56 pm | Permalink

      Exactly. Instead of giving the banks 20K (I reckon more like £40K) for each person in the UK – which in my household is £120,000 / £240,000 – give it us and we will make recovery happen.

    • alan jutson
      Posted March 30, 2009 at 3:45 pm | Permalink

      Adrian.
      Good idea in theory, but those of us who have lived within our means all of our lives would then get nothing for our efforts.
      Better if you want to redistribute all of the Country’s wealth in one go, to divide the amount you percieve as being available, by the number of registered people who live in the country, and divide the total by this number.
      We all then get the same amount to spend as we wish.
      Problem.
      Some will still go broke or want more !!!!!

      • Adrian Peirson
        Posted April 12, 2009 at 8:50 am | Permalink

        If they spend it unwisely that is there problem, I’d hope that their friends collegues or relatives would also be better off, sp maybe they can help out.
        People have to be able to look after themselves.

        And you would get something for your efforts, i’ve just given you your house for Free, no more mortage to pay off.
        I’ve just wiped out all your credit card debts and loans.

        Remember not every bank has failed.

        Sheesh, there is no pleasing some people, I’m not so sure I want to be PM now, I’m not appreciated.

        Ok, would you be happy if i did away with Income tax aswell by Printing all our worthless paper unbacked fiat money instead of Borrowing it At full face value from offshore banks, so you don’t need to pay it back as income tax, that way, everything you earn, you and your family get to keep ( so if your brother falls on hard times, you are better placed to help him out and the state doesn’t need to get involved so much ).

        I don’t need income Tax, I can ( for a while ) just print worthless paper and declare it legal tender, that’s what Gordon is doing and use this to pay for a smaller state, like a slimmed down and efficient health service staffed by doctors and nurses, not managers. Perhaps a small centralised one for more expensive services, MRI scans etc while you pay your local GP privately like in the Good olde days.

        And I’m doing away with Inheritance Tax too, like income tax, it’s theft, AND no more income tax forms to fill in EVER !!!!!

        Besides most of the money we collect in Taxes simply goes to pay the wages of those doing the Collecting, what an utter utter pointless exercise that is !!!! who thought that one up.

        And remember not every bank has failed.

        The only Tax I want in return for all this is a 5% tax on all purchases, I’m guessing 5% of all sales in the UK is still a pretty big number.
        that way I can buy Gold and Slowly put our money back on a Gold standard over the next ten yrs.

        No Wait, that won’t work, Where will the gold come from, I mean who is going to swap our Worthless paper money, for Gold, only a complete and utter Idiot would do something that stupid.

        So How am I going to get Gold / Silver / Precious metals into the country, to get my worthless paper currency back onto a Precious metal standard so I ( or anyone else ) can’t just conjure the stuff up out of thin air like I am doing at present.

        ahh wait I got it, Our Exports must be bought partly in precious metal, lets say 1% – 5% ( i’m making this up as I go ) which is then taken by me as Tax and built up in the Treasury,
        to slowly back our currency so that over time, 10 to 20 yrs, when I print off £100 billion it is actually worth something.

        ( I’ll be changing the Locks as well Gordon )

        The only fly in the ointment is that I’m fairly sure we buy more than we sell overseas nowadays, but since the Gold wont be leaving the country anyway, maybe its not a problem, its purely there to gaurantee that our money is honest money.

  11. Lola
    Posted March 29, 2009 at 10:14 pm | Permalink

    Trouble is there is now no chance of there being any truth in anything being said by anyone in any of this. You can’t trust the government – it is in melt down – as having based its whole administration on lies, this tecnique has come back to bite it firmly in the arse. You can’t trust the Bank of England, because its been found out and all its people will be in reputation saving mode. You can’t trust the FSA – actually you could NEVER trust the FSA. It always has been nothing more than the provisional wing of New Labour’s attack on wealth. You cannot trust the BBC to report this with any balance at all. In fact the only bloke you might just be able to trust is the DBS chairman.

    Gods knows how long we are going to have to put up with these lunatics, but be clear every day they are there thrashing about is another few squintillion down the tubes.

  12. Adrian Peirson
    Posted March 30, 2009 at 2:50 pm | Permalink

    Look on the Bright side though, this time next year we will all be Squintillionaires, Luvvly Jubbly.

    What I’d like to know is, doesn’t the Words Foreign or domestic mean anything to the British Army anymore.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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