I advised a family member that a Scottish mutual would be a safe place for their money and now the Dunfermline Building Society, the largest in Scotland, has gone bust. Investors will, of course, be protected and the profitable parts of the business sold off. However, the fact that such a body could go under does bring home the extent and depth of the financial crisis.
A senior executive of the Society was on television this evening complaining that 'faceless mandarins' in London had failed to bail out his society. Admittedly at £60m the cost is small compared to some financial bail outs. But why should taxpayers shell out to save an institution which has been caught out by risky commercial lending, as well as other failings?
There is a Scottish politics dimension to all this. Dunfermline is next door to the prime minister's constituency and there will be job losses. The Scottish Government has been involved in discussions about the Society's future. However, it may be that the Government feels that it owes them no favours, particularly when it comes to the independence of Scottish financial institutions.
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