Bradford and Bingley to be nationalised

[Sparrow]

Just spotted this on the BBC news website :huh:




Troubled bank Bradford & Bingley, which has seen its share price crash, is to be nationalised, the BBC has learned.
Officials from the Treasury and the Financial Services Authority (FSA) have been in talks with executives from the bank in a bid to secure its future.
BBC News business editor Robert Peston says the Treasury will then speedily sell B&B's 200 branches and its savings business to a bank or number of banks. But the British Bankers Association is unhappy at some aspects of the plan.


The rest of the story is here - http://news.bbc.co.uk/1/hi/business/7640143.stm

[mazza]

I dunno about all this. Now a bak in Belgium is being bailed out too so it's not just the UK and USA...

How can things be so dire and have gone on for so long before these latest disasters?

[Annabel]

This is a consequence of the Bradford and Bingley aggressively seeking market share and deciding to go for the 'riskier' end of the market i.e. Buy to Let and self certification borrowers. Their level of arrears is double the industry average.

They didnt have enough deposits from savers to lend out to borrowers so raised the shortfall on the money markets. These markets are now effectively closed, especially to smaller banks, and it was inevitable that Bradford and Bingley would perish.

there is now not one single demutualised building society left standing, all have become part of bigger institutions. of course now we have 2 that are nationalised.

And it is not over yet, there will be more failures.

[Enterian]

I'm sure that the former directors will go home to their nice comfortable houses, and in a few weeks will walk into another nice cushy job. And in the meantime they can live off the proceeds of the fat bonuses they used to pay themselves!

But then I'm just a grumpy old man!

[mazza]

what about Nationwide though - they seem to be doing ok and have swallowed up a couple of smaller societies not long ago :unsure: ? How will they fare?

I also don't get why, if the banks are private businesses that float on the stock exchange, why are the shareholders & directors not the ones that have to bail the failing business out?? :unsure: .

It's doing my head in all of this financial turmoil - thank heavens I'm not loaded then!! :lol:

[kebea41]

I'm sure that the former directors will go home to their nice comfortable houses, and in a few weeks will walk into another nice cushy job. And in the meantime they can live off the proceeds of the fat bonuses they used to pay themselves!

But then I'm just a grumpy old man!

Hi There,
Lol no you are not just a grumpy old man lol:) you speak the truth only we will never know what happens to the directors lol because none of these directors want us to know that:dry:

[Annabel]

I'm sure that the former directors will go home to their nice comfortable houses, and in a few weeks will walk into another nice cushy job. And in the meantime they can live off the proceeds of the fat bonuses they used to pay themselves!



Indeed, you are correct. Whilst the execs and directors encourage debt upon low paid people, they make sure they have no such debts themselves, and they salt away their bonuses so that when times are bad they can toddle off to the home in the country, lie low for a while until they can return to their previous positions.

this is what bugged me a lot about the proposed US bailout plan - there seemed to be no consequence for the irresponsible behaviour of these people, other than a 'cap' on their pay and no 'golden parachute' - we all know there are ways round things like that.


what about Nationwide though - they seem to be doing ok and have swallowed up a couple of smaller societies not long ago :unsure: ? How will they fare?


The Nationwide have benefitted enormously from all this turmoil. They have so much money on deposit it covers their liabilities more than three times. They have no need to go to the money markets to raise funds for lending.

This means they were able to absorb the Cheshire and Derbyshire Building societies without so much as a blink.

The situation with any Building Society is that their status means they can only raise a certain amount of money for lending on money markets. this is why so many of them demutualised as it was the only way they would be able to quickly expand and grab more market share..

Nationwide always took the view they were better off remaining as a mutual society and growing organically and they must be feeling vindicated at their decision. Like I said before there is not one single demutualised Building Society that remains standing, all have gone.

Now, just being a Building Society doesnt mean that they are not affected by the global financial turmoil. We will see a number of the smaller players getting swallowed up by larger Building Societies. This really is just a consequence of the downturn in the housing market and the intense competition for people's savings. However you wont see much fuss and bother when this does happen as mutual societies look after each other, and the lack of 'toxic' debts makes them nice tasty morsels to swallow up!

[mazza]

Oh I see, that's v interesting. I was wondering if the way the societies find money has meant that they are less affected. I am glad to know that Nationwide will be ok - they've fought off several hostile attempts to de-mutualise, good for them!

Just goes to show that the silly dolts that voted to allow their building societies to float for a quick buck in shares ultimately made a bad decision, given that none are their own entity any more.

I also bet that many people are very sick now, knowing that any shares they still hold are worth nothing much now. (eg Northern Rock) .

Maybe the capitalist system isn't a good model then? :unsure: .

I don't know why, but this whole thing has really made me pay attention - our system really is fragile, I think.

As for the USA not bailing out their banks, well, I never expected that but it seems to me that the ordinary person over there is saying what I've been thinking ie why should the gvt bail out a private business which has chief execs and shareholders?? I just don't see why these people are not liable :unsure: .

[Annabel]

Unfortunately the US government has to do something as there has been a systemic failure, not just a business failure.

the banking and financial sector is the heart of the capitalist economic system and if the heart fails, then I am afraid so will everything else. the consequences to us as normal people trying to get along day by day will be immense.

everyone wants retribution against those people at the top of the banks who profited from these excesses, and i am sure there will be investigations and prosecutions however, right now it has fallen to the governments around the world to step in and take control. its a terrible shame that certain Republican senators voted against the bailout bill on a personal level rather than acting for the good of the US and global economy.

the Irish government today has said it will guarantee all deposits and debts for all its banks for the next 2 years. some good news at least.

[mazza]

I notice an Icelandic bank is being bailed out by their Gvt too now. (BBC website has something about it.)

I am really glad I don't have much to lose, but even with what I have, I am finding this a rather worrying time.

I read analysts saying that they think it will get much worse before it gets any better - IF it gets better.

I really have no idea how things will resolve themselves at the moment. :unsure: .

Can you get fireproof, secure, burglarproof mattresses these days?? :huh: :lol:

[Annabel]

indeed, i thoroughly recommend the bank of 'SockUnderTheBed' :lol: