Sunday, February 17, 2008

Northern Rock and mutualism

As the government nationalises the Northern Rock its worth taking this opportunity to remember that the bank used to be that most solid of institutions, a building society owned mutually by its customers.

If Northern Rock had not succumb to de-mutualisation in 1997, it is unlikely that it would have experimented with such a risky business model based on lending long and borrowing short with wholesale funds.

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