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Bring back the building societies!

14 November 2008

Twenty years ago most South African building societies went commercial, and one result of this is that it became almost impossible for anyone except the very rich to save, because the commercial banks charged fees that emptied savings accounts faster than the poor could fill them.

In Britain, building societies that became banks have been causing huge problems, requiring government bailouts, while the buildings societies that remained building societies are now being penalised for the greed of the banks:

The chairman of the Building Societies Association (BSA), John Goodfellow has hit out at government plans to increase levies for the Financial Services Compensation Scheme (FSCS). The BSA estimates that Building Societies will be forced to pay an additional £200m into the scheme this year in order to bailout the savers of just Bradford & Bingley. A figure that is bound to rise once the cost of the collapsed Icelandic Banks is calculated.The BSA sees this as the mutual sector being forced to pay for the reckless behaviour of the banks. Not a single Building Society customer has lost money during the post war period. What’s worse is that HM Treasury has decided to base the levy not on institutional risk, but rather on the percentage of funds raised through retail depositors.

Meanwhile back home the ANC objects to the new party started by Mbhazima Shilowa and Terror Lekota taking the name Congress of the People — the Congress of the People was where the Freedom Charter was adopted in 1955. And building societies are more in the spirit of the Freedom Charter than commercial banks are. Yet the ANC and its alliance partners have done nothing about this for the last 15 years. It’s compatible with the guild socialism of people like G.K Chesterton.

If the new Congress of the People agrees to bring back the building societies and encourage them, they’ll get my support.

Hat-tip to Mutual Money.

Hat-tip to

3 Comments leave one →
  1. 15 November 2008 10:54 pm

    Dear Steve,

    I found your blog because of its inclusion in a bundle wordpress makes of all the blogs it hosts who met some criteria to fit in the category of banking, and I am delighted that I did. I am also sorry that google didn’t deliver your site to me, since I have a long-standing web alert for anything with the tag ‘distributism.’

    I don’t know what a building society is, but am figuring it’s a cooperative of some sort. I’m trying to find humane solutions to our present financial crisis, and more cooperatives is a great one(even large scale cooperatives, but I don’t exactly know what I mean by that yet). I have been trying to investigate schemes that put forward cooperatives and other ‘third way’ initiatives. If you visit my blog, please read Holy Mass and the Stock Market for a look at one such group (and the liturgical connection is going to make you laugh, even though I’m not Orthodox but traditional Roman Catholic). They have a book out called Capital Homesteading, and a party called the American Revolutionary Party. If you want a link to them, email me, I think I took it off my blogroll and you’ll understand once you read the piece (but you might not agree and want their links).

    I’ve got some other pieces you might enjoy–look around! Please take the Alpha Centauri poll under Silly Lily polls on the left column (believe it or not, I can make space both a religious and an economic issue; cf Please Send Catholics to Outer Space, too). And please comment on content, it will help me!

    Do you know of any parties or organizations that have any schemes applicable to the present circumstances, with so much virtual property other than land or capital as traditionally defined, worthy of being called distributist?

    For the record, I hope they save the Building Societies, too! How can we make it happen?

    I like your blog. Thanks for it. Thanks for being a seeker of truth.

    Jan

  2. 16 November 2008 5:43 am

    Jan,

    Thanks for the comment.

    Other blogs you might find interesting on the topic are:

    Mutual money
    The ChesterBelloc Mandate and
    The mutualist blog

    Building societies were common in South Africa and Britain. They could be described as housing cooperatives. Their business was purely to give mortgage loans, and they were owned entirely by their members. They borrowed money from the public and lent it to people who needed homes.

    Anyone could open a savings account or become a shareholder in a building society. Shares could be bought over the counter for small amounts.

    Most of the South African building societies became commercial banks about 1987, and began charging high fees for savings accounts, which made it impossible for the poor to save, whether for homes or anything else.

  3. Porlock Junior permalink
    24 November 2008 7:25 pm

    I think the Building Societies were similar to the Savings and Loans in the US. But that’s not much help as an analogy, since the S&Ls were consolidated, looted, bailed out at our expense, and turned into banks way back in the 70s-80s. Famous S&L of the later period: Washington Mutual, the fame of which has probably spread beyond these shores. It would be splendid if the Building Societies could be saved from this fate; perhaps the current appalling financial disaster will make that possible.

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