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Building Societies Upset By Fsa Restrictions

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From Times Online September 7, 2009

Building societies hit out at FSA curbsMark Atherton

The Financial Services Authority (FSA) says the curbs are required to ensure there is no repeat of the situation leading up to the credit crunch, where some building societies moved heavily into activities such as sub-prime lending and commercial property loans without having the proper controls in place.

But the Building Societies Association, the mutual lenders’ trade body, argues that the tighter regulations proposed for its members by the FSA will weaken them “by uniquely fettering their ability to competeâ€.

The City watchdog is proposing that building societies are split into three different categories — traditional, limited and mitigated — depending on the riskiness of the lending they plan to undertake.

At the moment both banks and building societies will sometimes lend up to 90 per cent of a property’s value without a mortgage guarantee. Adrian Coles, director-general of the BSA, said: “This would put us at a disadvantage to our banking rivals, especially when competing for business among first-time buyers.â€

Both traditional lenders and societies falling into the "limited" category would be able to offer buy-to-let loans, but with loan-to-value (LTV) limits of 70 per cent and 80 per cent respectively. Those in the limited category would be able to offer a wider range of products, including self-certified loans and some mortgages to people with a poor credit history. The LTVs for these would be 75 per cent and 70 per cent respectively.

Lenders in the mitigated sector would be allowed to undertake the most diverse types of lending but this would be allowed only where sophisticated risk controls were in place.

Mr Coles said: “Some of the proposed limits are so restrictive that it will be difficult to prevent breaches, a situation in which societies would not wish to find themselves.â€

He called on the FSA to hold back from bringing in a new restrictive lending regime focused only on building societies and to wait until the watchdog’s wider-ranging mortgage market review, which also covers banks, had been completed. In this way any lending curbs could be applied across the board

http://www.timesonline.co.uk/tol/money/pro...icle6824688.ece

So Building Societies have to do sensible lending but the FSA are happy that banks are still too big to fail and not interested in making them separate "casino" banking from retail?

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Building societys should never have gone into BTL they should remember why they started, So people could buy HOMES.

trouble is, if the banks are unregulated in the SAME WAY, then they will be able to be cheaper...the Building Socs will sell no mortgages, wont be able to pay savers who wont save with them.

I dont see why there is not just a regulation on the lending criteria, like 50% deposit and 3 x main earners income.

deviation nullifies any recourse.

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I dont see why there is not just a regulation on the lending criteria, like 50% deposit and 3 x main earners income.

!! - Wilson! - Take this man's name!

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Should the building societies have offered the FSA a £200m loan at a better rate than the banks?

The FSA has borrowed a total of £200m from two banking giants after falling into debt for the first time, reports suggest.

According to the Independent on Sunday (IoS), the regulator has drawn on a £100m credit agreement with Lloyds Banking Group and borrowed a further £100m from HSBC.

AdvertisementThe FSA spent £347m in the past year but raised only £324m from fees and other revenues. Although its cash balance averaged £56m last year, it had fallen to just £200,000 by the end of March, compared with £24.8m in the same month in 2008

http://www.ifaonline.co.uk/cover/news/1495...200m-sinks-debt

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trouble is, if the banks are unregulated in the SAME WAY, then they will be able to be cheaper...the Building Socs will sell no mortgages, wont be able to pay savers who wont save with them.

I dont see why there is not just a regulation on the lending criteria, like 50% deposit and 3 x main earners income.

deviation nullifies any recourse.

Taking away the 10-20% deposit and 3 x earnings rule has led to the most extreme damage to our economy and nation than even a war would have caused. It has destroyed us as a country.

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Taking away the 10-20% deposit and 3 x earnings rule has led to the most extreme damage to our economy and nation than even a war would have caused. It has destroyed us as a country.

For a second post that was remarkably lucid, concise and accurate.

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Taking away the 10-20% deposit and 3 x earnings rule has led to the most extreme damage to our economy and nation than even a war would have caused. It has destroyed us as a country.

Correct!

Perhaps it has opened your eyes to the type of people who are governing this country and who 'governs' them!

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Taking away the 10-20% deposit and 3 x earnings rule has led to the most extreme damage to our economy and nation than even a war would have caused. It has destroyed us as a country.

Bravo 'intheclear'.....(grammar aside)

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Taking away the 10-20% deposit and 3 x earnings rule has led to the most extreme damage to our economy and nation than even a war would have caused. It has destroyed us as a country.

Quite possibly.

If that doesn't do it then the refusal to take the corrective medicine will certainly.

The patient is gravely ill yet arrogant beyond belief

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Building societys should never have gone into BTL they should remember why they started, So people could buy HOMES.

+2

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We should just scrap the FSA and let the French regulate our banking industry.

After all, they already run much of our power generation. The French are far more sensible. They are limiting banker bonuses and they have always had stricter rules on mortgages. Its still a criminal offence to bounce a cheque or have an unauthorised overdraft in France!

The French have still had a bit of HPI, but I bets that just the Brit and their banks driving up prices wherever they go.

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We should just scrap the FSA and let the French regulate our banking industry.

After all, they already run much of our power generation.

'EDF unveils team to run quarter of UK's electricity supply' [January 2009]:

http://www.newenergyfocus.com/do/ecco.py/v...listitemid=2120

The combined business boasts 16.5GW of installed generation capacity, producing nearly a quarter of the nation's electricity.
The French have still had a bit of HPI, but I bets that just the Brit and their banks driving up prices wherever they go.

'House price growth top in Estonia' [March 2006]:

http://news.bbc.co.uk/2/hi/business/4782434.stm

UK influence?

It is sometimes suggested that houses prices in countries such as France and Spain are affected by the UK. The idea is that booming prices here over the past 20 years or so have fuelled the ability of UK residents to buy holiday homes abroad, thus driving up prices in some foreign countries.

But Professor Ball reckons this may apply only to certain holiday areas.

"France has about 30m homes but only 260,000 UK residents own homes there," he said.

"And most of them don't own them in the big cities like Paris, Marseille and Lyon where prices have been growing strongly."

Although French house price inflation slowed in 2005 it was still just above 10%.

Professor Ball says the reason why the European property market been so buoyant, with prices rising strongly above inflation, is fairly straightforward.

"People want better quality homes, want more of them, and low interest rates enable them to do so," he said.

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Taking away the 10-20% deposit and 3 x earnings rule has led to the most extreme damage to our economy and nation than even a war would have caused. It has destroyed us as a country.

what the banks do isnt the problem, it's the bailing out of the banks that is the problem

I could care less if Northern rock offered 10 x mortgages as long as we let them collapse and fail like every other business

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trouble is, if the banks are unregulated in the SAME WAY, then they will be able to be cheaper...the Building Socs will sell no mortgages, wont be able to pay savers who wont save with them.

I dont see why there is not just a regulation on the lending criteria, like 50% deposit and 3 x main earners income.

deviation nullifies any recourse.

Agreed, you can't have one sector working responsibly and its competing sector taking lunatic risks. You just end up with the good sector shrivelling away. Those saying above that BSs should just fund home loans, how are they to attract the deposits, if the banking sector is able to offer higher returns?

Truly risk-based regulation would be dealing with this fundamental issue, not splitting the industry between little boxes with different rules depending on the label on the outside of the box.

I don't particularly like micro-managing deposit %age etc. though. A more important reform IMO would be forcing lenders to keep their loans -- and thus the risk they're generating -- on their own books.

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