Comments on: Regarding mutual banks

By: Matthew

Matthew — Tue, 24 Mar 2009 12:36:42 +0000

“They’ve shown that they’re incapable of determining risk properly and so it should be left to insurance companies”

AIG seem the most obvious candidate.

By: ZT

ZT — Tue, 24 Mar 2009 01:34:23 +0000

‘Weren’t Savings and Loans the US equivalent of mutualised Building Societies? ‘ No. S&Ls were stockholder owned. They were originally restricted to making home loans, but when this restriction was removed (Congressmen were bribed) they got into more risky areas. Credit Unions are the US equivalent of mutual societies.

By: The Remittance Man

The Remittance Man — Mon, 23 Mar 2009 21:09:59 +0000

Weren’t Savings and Loans the US equivalent of mutualised Building Societies?

They worked really well, didn’t they.

By: Tim Almond

Tim Almond — Mon, 23 Mar 2009 13:33:09 +0000

Tristan,

I think that we need government out of the risk protection business. They’ve shown that they’re incapable of determining risk properly and so it should be left to insurance companies. They protected both Crock and Nationwide at the same (zero) cost despite one being a more risky business than the other.

By: dearieme

dearieme — Mon, 23 Mar 2009 12:31:34 +0000

An adjustment of the incentive structure might be useful too: hanging some CEOs pour encourager, say.

By: Tristan

Tristan — Mon, 23 Mar 2009 10:59:29 +0000

There are no easy solutions – utopias do not exist.
There are some things which will help mitigate the risks and cushion the effects of inevitable bank failures.

A mutual system is one possibility – personally I’d like to see government out of banking giving a freed market to allow greater competition between different models.