MUTUALIZE THE BANKS ?-YES!:
A tip of the Molly hat to Larry Gambone of the Porkupine Blog for bring this to my attention. It seems that in Britain there is a move afoot to "remutualize" at least two of the failed banks. To say the least this is a positive development. Mutuals, known in this country as credit unions, are naturally more cautious than the free wheeling banks that led the world into the present economic crisis. They provide a natural barrier against the sort of speculation whose results we are seeing today. In addition, and perhaps most importantly, they provide a non-governmental source of credit that would be available to the many (and probably many more in the future) enterprises that are presently in dispute, often with workers' occupations of the facilities. Mutuals/credit unions could be a source of credit for such enterprises if their workers wish to turn them into producers' cooperatives. They would provide a third alternative different from either waiting for a private "white knight" or calling for nationalization of the workplace in question. The agreements taken up with such mutuals leave the actual workplace free to develop true workers' self-management, something that neither private buyouts nor nationalization does.
Yes, the British initiative is small, but I hope it comes about and that it is imitated on a larger scale worldwide. Here's the news from the pages of the British newspaper The Guardian.
Turn failed banks back into mutuals, Labour told:
Rock and B&B should be restored to savers
Pressure is mounting for the government to explore ways to remutualise Northern Rock and Bradford & Bingley, nationalised after the shares crashed amid fears that they could collapse amid the world financial crisis. Both companies were mutuals before becoming stockmarket-listed banks in the 1990s.
Labour MPs are pushing for the government to expand the role of mutuals, which are owned by depositors and borrowers. They do not have shareholders who may be more interested in diverting profit to bolster dividends than getting customers a better deal.
Mutually owned building societies are widely viewed as more cautious than banks, which have been accused of irresponsible lending during the boom. Societies are barred from funding more than half their mortgages from the wholesale money markets, which have frozen up in the wake of the credit crunch.
One option would be to remutualise Northern Rock and B&B, both of which have been rescued by the taxpayer at a huge cost, although part of B&B was acquired by Spanish bank Santander. The principle of remutualisation is supported by the Co-operative party which sponsors 29 Labour MPs, including schools secretary Ed Balls.
The Co-op's general secretary Michael Stephenson said: "The government could consolidate Northern Rock and its holding into one institution; when all debts are paid back, the institution could be converted into a building society. Alternatively, government could give existing financial mutuals (such as Nationwide) the right of first refusal when it decides to put the institutions it nationalised up for sale."
John McFall, Labour chairman of the Treasury select committee and a Co-op sponsored MP, says: "If ever there was a time for an expanded mutual sector, it's now. We desperately need to restore faith in financial services in this country." Although he stopped short of calling for a firm commitment to remutualise the Rock and B&B, he told the Observer that the idea was "a fertile area for debate".
He was backed by Mark Lazarowicz, Labour MP for Edinburgh North and Leith, who says: "This is an issue that is worth airing at a time when confidence in the banks is at an all-time low."
Martin Weale, director of the National Institute of Social and Economic Research, said remutualising Northern Rock and B&B could be a relatively simple, albeit lengthy, process with money owed to the taxpayer repaid by borrowers who redeem their debts over time. New "membership" shares could be issued to depositor/members, he said.
It emerged this weekend that the Building Societies Association is to commission academic research into how the mutual sector could be expanded in Britain, after banks that ditched mutuality in favour of plc status have either been nationalised or taken over in "mercy killings" by rival institutions. They include HBOS, which has been merged with Lloyds TSB, and Alliance & Leicester, which was bought by Santander.
Stephenson said: "When the last Conservative government encouraged building societies to demutualise, it plundered generations of assets from mutual societies, replacing prudent mortgage providers with some of the worst culprits of casino capitalism."