Dunfermline – yet another bail out

The government will spin that there is no bail out for this Building Society. Yet we learn in the smaller print that taxpayers are likely to end up owning the bad debts and the dodgy assets, or at least guaranteeing the deposits. So it’s not dun bailing – it’s more bailing.

I guess they have chosen to spin it this way for three reasons. One, they must know the rest of us are fed up with bailing out rich bankers and badly run institutions. Two, this one is in Mr Brown’s backyard, so they don’t want it to look cosy. Three, this one is a Building Society, a mutual. Labour has been telling us the mutuals are great, unlike the Societies that went to market.

So it’s not dun lying then. They’ve been wrong about mutuals as well. We now can see that they failed to regulate the cash and capital of Scottish Building Societies, mutuals close to home, just as much as they failed to regulate the cash and capital of demutualised companies.

Last night the BBC invited me to debate the G20 with Derek Draper. Like the rest of Labour he seemed unable to grasp the point that they should have regulated the risk of the mortgage banks, at a time when they introduced all sorts of new mortgage regulations which failed to stop a single dodgy mortgage. Mr Draper’s inability to understand this basic point, just as Ministers fail to grasp it, meant most of the interview was wrecked. You cannot have an intelligent conversation with these people, because all they want to do is to miss the point and bash the Tories.

I have always wanted tough regulation of the mortgage and other banks to make sure they have enough cash and capital for the loans they have advanced – pity they didn’t do. Their failure to do so is going to cost taxpayers a massive sum, as yet another Scottish financial institution struggles to the Treasury and seems to think it has a divine right to taxpayers money when it’s in trouble. If they had regulated these banks properly, as previous governemnts did, they would not be needing taxpayer support or taxpayer buy up of the toxic debts. Tougher regulation of cash and capital was what we were calling for well before the crisis hit.


  1. Simon D
    March 29, 2009

    Yesterday a leading supermarket group announced it was going into the retail banking business. Its ultimate objective is a bank for individuals in every super-store in the group. The bank will be “no frills” with no overpaid traders housed in glass palaces in the City chasing telephone number bonuses on sales of toxic derivatives.

    If this kind of thing catches on where will it leave the Government and the taxpayer who now own super-sized legacy banks? Who will buy their over-priced over-engineered banks when they come to the market?

    My prediction is that other supermarkets will follow and between them they will probably clean up on the mass market for retail banking. Superstores know a lot about customer service. Legacy banks don’t.

    Could it be that the market is going to supply a revolutionary solution to the banking crisis under the Government’s nose?

    1. jim
      March 29, 2009

      This is a good point, especially as we could still be close to the beginning of some huge losses for the banks.
      In Japan, where I live, property prices fell 90% from the peak to the trough, and have now started falling again. Obviously there are some market differences to Britain, demographics and so on.
      In Britain house prices were two standard deviations above the mean. If they return to the mean price the banks losses will be massive, leaving the supermarkets to clean up as you point out.

    2. Lola
      March 29, 2009

      “Could it be that the market is going to supply a revolutionary solution to the banking crisis under the Government’s nose?” – Of course it will! If the witless gummint had put RBS/Lloyds/HBOS into receivership the market would have sorted it all out by now – at no cost to poor old taxpayer.

  2. Stuart Fairney
    March 29, 2009

    In the grand scheme of things this is a tiny society, albeit ‘Scotland’s biggest’ Depositors are already protected, why on earth is this simply not put into liquidation and the board members (who if i know my mutual law correctly) would be left with some serious personal responsibility for the debt.

    Please chancellor, I do not want more worthless debt, nor is there any reason this should be foisted upon me.

    (A personal aside, what’s the betting if they had a Labour MP not a Lib Dem, and Labour ran the Scots parliament with an overall majority they would be fully bailed out?)

  3. Brian Tomkinson
    March 29, 2009

    JR: “You cannot have an intelligent conversation with these people, because all they want to do is to miss the point and bash the Tories.”

    This happens all the time on media discussions and in parliamentary questions where the lead is given by the mendacious Brown. That said, you were in particularly bad company having Draper as your “debating” opponent. He has appeared on TV several times recently and comes across as a loud-mouthed bore ( I am being polite) whose “debating” technique is to talk(shout) over his opponent.
    From your description and other recent failures to use your contributions, it appears that, far from giving you an opportunity to express your views, the BBC is deliberately trying to drown out your opinions.

  4. Jim Pearson
    March 29, 2009

    Not surprised, most MP’s arn’t that good at economics, labour ones less than average joe. Still, keep plugging away, I have great respect for your ability to get through eventually. Maybe it’s time to ask for MP’s qualifications to be upped before they can take their seats in Parliment? Who knows it might up the quality a little?

  5. APL
    March 29, 2009

    JR: “Labour has been telling us the mutuals are great, unlike the Societies that went to market.”

    Hmmm, as it happened I thought that too. But I understand this particular building society was exposed to commercial property. Predictably, that sector has taken a blow with this downturn. Another unrelated former mutual is restricting withdrawals from one of their commercial property funds.

    JR: “Mr Draper’s inability to understand this basic point, ..”

    His intent is not to debate or discuss an issue with the aim to eventually get to the truth, rather to obfuscate and obscure the truth. When you hear the man talk as for example with John Snow and Daniel Hannan the other day on C4 news, he was ‘blowing smoke’ everywhere.

    Mr Draper is, in my opinion a second order ‘snake oil salesman’, rather like Alistair Campbell and Mandelson, but not nearly as accomplished.

    He can’t even exaggerate his own qualifications credibly.

    1. Citizen Responsible
      March 29, 2009

      Mr Draper’s parting remark to Daniel Hannan was “a demented speech from a demented party.” I was surprised to hear a professional psychotherapist using “demented” as a term of abuse.

  6. oldrightie
    March 29, 2009

    It begins more and more as though everything is geared to an election. I suggest they may be forced to go to the country anyway. This madness is so out of control.

  7. Stewart Knight
    March 29, 2009

    Draper, like all Labour and Labour supporters, understood well but are, like Brown, in terminal denial and are delusional. If they admit anything, however trivial, their whole strategy over the past 15 years, to portray the Tories as incompetent and sleazy, falls apart.

    Draper knows this and did you shower in bleach and decontamination material after you were in his presence? Why does the BBC even allow him air time or is that a silly question?

  8. Ruth
    March 29, 2009

    Sorry, John but intelligent conversation of any kind is simply not possible with Draper, never mind about politics/mortgages/the state of the nation. The man exemplifies in an extreme way everything that is wrong with Labour – inability to listen, inability to think through any issue in a rational way, unwillingness to look at potential consequences for actions and an obsession with spin/misdirection, amply illustrated by the non-story this week of the rules of succession.

    Those of us with brains and who rely on the internet for news and opinion, unfettered by the mainstream media are finally starting to be noticed. Keep up the good work!

  9. Freddy
    March 29, 2009

    Wow, Draper vs Redwood, I missed this – on what program was it ?

  10. alan jutson
    March 29, 2009

    Me thinks that the Labour lie is at last unfolding.

    Mutual Societies going broke not due to poor mortgages granted to its members, but from buying prime mortgages on the open market as investments (if the news is to be believed) allowed due to poor regulation.

    Many countries now refusing to go along with dear old Gordon on the request for added financial incentives to push the ecomony forward and now telling him that to his face, Chile, Brazil, Germany, Spain etc.

    The excessive National debt that we are building up (built up) during the last couple of years, now at last begining to show through in figures from INDEPENDENT sources which are being published.

    Mps expenses scandles, which again shows complete lack of control, and morality, raising its head again this morning.

    The G20 preparations only have left the wish to revise the World wide regulation of the Banking system. Important as it is, do any of us see any agreement in the forseeable future that will be effective and workable.

    The full effect of the Bail out for the Banks has still yet to be fully felt and calculated, but it will slowly dawn on some editors.

    What an absolute bloody shambles, if this were a Company UKPLC, the Directors (Ministers) would be banned from ever holding a senior position ever again, such is their incompetence and lack of vision.

    lets face it, we have had a megalomaniac in charge of the country’s accounts for 12 years, and we are now effectivelly bust.

    John many here have suggested you get yourself on U tube make video’s and the like. Tempting as this may be, I suggest this is not the right course to take, as you will be seen as a maverick or a loose canon, who will then loose the position you have taken, of the intelligent higher ground.

    Frustrating as it is, (and I have to say I admire your patience) I would urge you to maintain your contact with the normal forms of publicity, and let the Conservative Party as a whole investigate the other newer forms of media exposure with a view to maximise impact in the coming months.

    Obama won by using the existing media, AND by embracing the new technologies.
    Perhaps the Conservatives can take a lesson here.

    Keep up the good work in exposing the crass logic of Labours financial Policies, and I am sure it will eventually pay off.

    But what a position to inherit !!!!!!!!!!

  11. Denis Cooper
    March 29, 2009

    I don’t think mutual building societies are exactly “great”, but I do like them.

    Not because I’m Labour but because a) they’re (supposedly) more closely regulated and therefore (in theory) they’re less likely to behave imprudently with the money that members entrust to their care; and b) they generally offer the best savings rates.

    On a more sentimental level, they also represent a vestige of a culture of self-help and local collective initiative which was once prevalent in this country, at a time when the country itself was “great”.

    I should have thought that a story like this would resonate strongly with current Conservative policy:

    “A tantalisingly brief account of the annual meeting of the Compton Pilgrims’ Benefit Society. ‘Five hundred persons sat down to a hot dinner, cheering loudly as the Secretary reported that thou­sands of people had been helped during the year, and “saved from having to go on parish relief” ”

    “Why should so many people converge on a ‘remote village on the Berkshire Downs’? Why ‘Compton’? And why ‘Pilgrims’? ”

    “The Pilgrims had been founded in 1835 by Primitive Methodists who felt isolated and persecuted, and the Society had expanded across rural Berkshire and beyond. By 1911 membership, no longer essentially religious in character, had risen above 3,300 and 27 branches had been established.”

    “… until 1964 when its engagements were transferred to the Gloucester and West of England Holloway Society. More than a century of mutual endeavour, all the more remarkable in that it was managed entirely by local working men”.

    “The rival was the Royal Berkshire, a ‘County-type’ friendly society, established in 1872 by local gentry who believed that rural labourers were incapable of acting for themselves. ‘Poverty and ignorance,’ they argued, ‘would probably always need some aid from the wealthy and instructed.’ Like the Pilgrims, the Berkshire established village branches, though its character was different, with paternalism in place of working-men’s indepen­dence of spirit.”

    There’s no doubt that once they were freed from the legal constraints which were evolved over time in response to the collapse of some of the early building societies, those running the demutualised societies became increasingly reckless, and none of them are now independent entities.

    While as far as I know only three of the remaining fifty-odd mutual building societies have got themselves into serious trouble – Cheshire, Derbyshire and now Dunfermline.

    The first two were quietly taken over by Nationwide, more or less as part of the ongoing process of consolidation which has been forced on the building societies through the mergers of their competitors, the banks – which have been allowed to consolidate to the point where none of them can now be allowed to fail, as you have pointed out.

    In recent years Nationwide has already taken over Portman and Staffordshire, and before that Anglia.

    There’s a valid complaint here on the website of the Building Societies Association:


    “Building societies are having to pay an unfair share (up to £200m pa) of the bill for bailing out Bradford and Bingley and other failed banks. The BSA and more than 150 MPs are calling on the Government to bring in a fairer system.”

  12. chris southern
    March 29, 2009

    So the taxpayer (people of the UK) get the debt and the good assets are to be sold off privately, good god, that’s so messed up it has to be a “gordon” plan of genius.

    If a goverment cannot control it’s spending, the people of the country should not be forced to pay for it’s excess. The goverment, just like any iresponsible business should be allowed to go bust. We are a banana republic in all but official name.

  13. ROFL
    March 29, 2009

    Last night the BBC invited you to debate the G20 with Derek Draper?

    Having seen two of his recent TV performances, I can only imagine that he was brought back into the fold as Labour has now started the process of hammering nails into its own coffin. He doesn’t know the meaning of debate. He is a one-man verbal steamroller full of agenda, showing time and time again that he is incapable of listening to another’s view, let alone debating the issues presented. Last week he was seen talking over other guests and the presenters. Andrew Neil actually told him to “shut up”.

    He does not add to a debate, he works to banish it, and is a true face of the Labour party in all its unrefined glory, wagging his index finger as he goes.

    What was the programme, John? Is it on iplayer?

  14. ROFL
    March 29, 2009

    Have you seen this?
    Showing their immaturity again.

  15. JohnOfEnfield
    March 29, 2009

    I listened to the BBC Radio 4 @ 1 p.m. today and we had several views – one from Scotland (The Leader of the SNP) & another one from… Scotland (McFall – the Chairman of the British Parliamentary Treasury Committee?) and yet another quote… from Scotland (Alistair Darling). The lie (let’s call it by its proper name) that we were not wasting Government money was there for all to see but was not tackled by the “interviewers”.

    Where was the discussion about the impact of the “Deposit Insurance Scheme” levy because of the B&B & NRK – which the BBCs Money programme yesterday said was as much as £7.5m – on the viability of DBS. ?

    Where was the balance of political opinion? Not even Vince Cable was canvassed for an opinion (mind you I would have complained about this too – if that had happened!). The BBC has become a publicly-paid-for arm of the Government’s Spin Unit.

    And WHY is the Government STILL proposing to take on the so called toxic assets from the Dunfermline BS? Why can’t we just protect the depositors & let the remaining assets (if any) pay off the liabilities? If there are insufficient assets then these so-called “toxic assets” can’t cause any further damage.

    If current laws forbid this then a quick one-line bill should fix that problem. Ah – I remember – not enough parliamentary time.

    Please keep up the good work of exposing this government for its mendacity, incompetence and spiritual & intellectual confusion.

  16. Robert Eve
    March 29, 2009

    I can’t think of anything worse than sharing a room with the man who calls himself Draper.

  17. Richard
    March 29, 2009

    Do you have a link to the Draper interview?

    Reply: No, I do not I am afraid.

  18. Man in a Shed
    March 29, 2009

    I’m beginning to think the point of Draper is to prevent any debate or discussion.

    Mr Draper’s Labour list seems to exist to fill the empty space in Labour supporters heads where their own worked out opinions should be.

    At a higher level they must recognise they would lose any rational debate, and hence have gone for spoiling the debate instead.

    What’s needed is for right of centre commentators to acuse him of this every time early on.

  19. adam
    March 29, 2009

    I see Draper is getting plenty of coverage on the BBC then.

    “You cannot have an intelligent conversation with these people, because all they want to do is to miss the point and bash the Tories”

    You certainly have Drapers number

  20. AndrewSouthLondon
    March 29, 2009

    To “get off Scot free” – a wonderful antiquated expression due for a relaunch, John. Time soon to float Scotland off, with its own Parliament and its own toxic debt, Gordon lashed to the mast.

    Surely this is all about frightening us all into the belief we need Gordon to save us (we don’t) and scaring the Scots off voting SNP, because only “their Labour man in Westminster” can be guaranteed to soak the Tory English South of taxes to bail out failed Scottish financial institutions.

    To think once we believed the Scots were “canny about their bawbies” How different it looks now.

  21. mikestallard
    March 29, 2009

    Inside the left are a lot of really interesting and good people.

    Let me be honest. I support the little man against the big. I passionately want poor people to have an excellent education. I get furious at the shambles within hospitals of the NHS. I am quite prepared for my country to change, if necessary, quite radically.
    I read the Spectator, but find that the most trenchant articles so very often come from people who have grown out of Socialism, but who retain the acerbic realism of their left wing roots. The left is witty very often. And it hits the point too.
    And who is actually on the streets this week? Not the right, who even messed up their protest about hunting, or when half a million people converging on London for the Countryside alliance at the beginning of the Tony Years were completely bypassed.

    So is Derek Draper really all they have to offer? I keep hearing about the intelligence of Mr and Mrs Balls. So where are they? Why are Labour playing their third eleven? Is that really all they have to offer in perhaps the greatest crisis since 1945?

  22. Lola
    March 29, 2009

    Tough regulation on capital and solvency for banks is certainly what is required. Meanwhile on planet Zog the FSA is thrashing about with nonsenses like RDR and TCF (Look them up on the FSA website if you want to see how bonkers they are) and inflicting mssive regulatory burden on small FS businesses, most of which have been cautioning their clients about debt and the state of the UK banks and the witlessness of the FSA for years. Now, the FSA having been found out and having no credibility left, resorts to more and more coercion to force its entirely disreputable and unworkable agenda on small FS businesses (like mine).

    The current regulatory system as the spawn of the most useless Chancellor and PM ever is bound to be useless.

    Oh yes, and the fact that the FSA describes itself as the ‘independent’ regulator financial services is the final insult. It is a government quango. if something looks like a duck, swims like a duck and quacks like a duck, whatever you might call it, it is an effing duck.

  23. Will S
    March 29, 2009

    If you don’t have a link to the interview, could you give details of which programme it was, so we can look for it?

    Reply: I think it was Nolan on Five Live. It was at 11.20 pm on Saturday night – I remember that bit as it was such an anti social time.

  24. Amanda
    March 29, 2009

    Mr Stallard, my roots are completely of what has in the past been known as ‘the right’. Let me tell you what I stand for.

    An honest, just, fair society. Where there is freedom, responsiblity, and achievement. I don’t take sides in a class war because it is obvious that every society since the dawn of time has had its ‘class system’. Leaders are needed, whilst there will always be those who are lazy, selfish and don’t want to contribute.

    What I care about is helping people make the best of themselves, of finding their talents and fulfilling ther potential. I care about a society where people help each other, that is what patriotism is all about to me.

    Socialist economics have never worked; socialist philisophy on equality of outcome for all, is unfair to all – it means that few achieve their potential.

    I want my country to change for the better; not to swerve in radical directions led by tyrants. I want people to be able to debate and discuss the future based on a first class education on history and ideas; not ruled by emotional sounbites because they have been taught to parrot the base mantras of ‘the left’.

    Are you really suggesting that that rag bag of ideas that marched in London yesteday was a triumph for our civilization? They didn’t understand the benefits of free markets, they didn’t understand the nonsense pumped into them about climate change, and they have been provoked into a dangerous hatred of bankers – unwarented by the vast majority of people in Financial Services. To me they reminded me of the orcs let loose by Sauron.

    But you are right about one thing; it is time all ‘right thinking’ people, started reclaiming our society, and slowly and surely pulling it back from the slough of socialist despond.

    Unfortunatly yes, Mr Draper is what socialists become if they dont turn right.

  25. Jim the Jock
    March 30, 2009

    I notice quite a number of anti-Scottish comments on the replies to this blog. Perhaps the Conservative and Unionist party does not regard Scots as worthy of representation by them?
    Think this through. If Scots like me are opposed to Bank bail outs, snout-in-the-trough expense claims and MPs who choose to use their offices for personal liaisons, then who would you encourage us to vote for?
    Unintelligent anti Scottishness simply won’t wash. HBoS and RBS were international financial institutions which happened to have a base in Scotland. Their business was to make profit for their shareholders which they did for many years until they failed. They failed because of their business models, not because they happened to have bases in Edinburgh.
    Enough of blaming the Scots, move your target to the policies not the nationalities.

    Reply: I am not anti Scottish, and do n ot target the Scots. Any Scot who is a Unionist who wants his or her country to be better run should realise that only the Conservatives can marshall the numbers to replace the present government.

    1. Lola
      March 30, 2009

      I am English. The Scots ore our neighbours. The Scottish people are good frineds of ours. When times is hard one’s friends and neighbours also suffer, and if possible, as neighbours, we will help each other. It might be that we are both in a bad way, but by working together we can turn things round and prosper again. But, we have to be sure that one’s friends and neighbours do the best they can to help themselves. It is not in either of our interests for our friends and neighbours to carry on with bad ways all funded by the charity of their friends and neighbours.

      The Scots as a people are absolutely our neighbours. Unfortunately they have allowed themselves to end up being governed by politicians entirely incapable of the job. There are all sorts of reason for this that merit a separate and far longer post, but part of the solution to the current crisis is for the Scots to recognise this and elect a government that can govern simply, efficiently and low cost. Acting as responsible friends of ours they need to change the high spending governemnt, then we can move forward together.

      1. Denis Cooper
        March 30, 2009

        Here’s one good reason why the Scots are being governed by politicians who are largely entirely incapable of the job – because the Tory party foolishly threw away its previously strong support in Scotland.

        OK, so it was more the “Unionist” part of “Conservative and Unionist”, but in the 1955 general election they got more than half of the votes and won seats right across Scotland, yet by 1997 they’d been totally wiped out.

        I’m not saying that the Tory party invariably has politicians who are more capable, just that they by vacating the field they left Labour, and the left in general, to hold sway with no effective opposition.

        I have no time for the minority of Tories who now say, in essence: “The Scots won’t vote for us any more, so let’s dump them”.

  26. Will S
    March 30, 2009

    The interview can be found here (about 20 minutes in):


Comments are closed.