The Dunfermline, Scotland’s biggest building society, is the latest victim of the recession. The Nationwide, which is the largest building society in Britain, has taken over the Dunfermline’s healthier assets in return for £1.6 billion from the government.
New Labour has also taken on £1 billion of the Dunfermline’s ‘toxic assets’. This is another example of the one-sided nature of Gordon Brown’s approach to the crisis. He allows major financial institutions to keep control of the best bits of the banks, while the state takes on all the rotten parts.
It also highlights the deep, systemic crisis that capitalism is facing. Building societies were supposed to be the ‘safe’ part of the banking system, regulated to stop their bosses from embarking on madcap schemes.
Despite this, Dunfermline made £650 million worth of commercial property loans, many of which had to be written off as property prices fell.
No firm is immune to the contagion that has spread through the system. The Dunfermline won’t be the last financial institution to collapse.
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