One of the most significant lessons of the global financial crisis is surely the need for a strong mutual sector (Report, 25 February). Many of the banks that got into difficulty were demutualised building societies. Financial mutuals, building and friendly societies, and credit unions were not responsible for the crisis. They do not have a culture of large dividends or excessive bonuses, and research across Europe has shown that a strong mutual sector helps to prevent excessive profits at banks.
The government should now set out clearly its position, three years after Northern Rock was nationalised. The Banking Act 2008 allows state-owned banks to be converted into mutuals. That could be by sale, merger or the creation of a new entity. An Oxford University thinktank has set out how Northern Rock could be remutualised, ensuring its debt to the taxpayer is paid down, creating a stable financial services provider, while helping to secure a more competitive retail banking market. So the next step should be a full feasibility study into the financial, governance and leadership issues of remutualisation.
The coalition also needs to ensure that new bank capital rules do not put the remaining building and friendly societies in difficulty. The rules being negotiated across Europe risk preventing UK building societies from competing fairly with private shareholder banks, while the Financial Services Authority's new rules for friendly societies could lead to their demutualisation. These draft capital requirements do not reflect the fundamental difference between financial mutuals that are run for members, and banks run for shareholder gain. Finally, the government could help credit unions to expand, offering people a low-interest rate alternative to the high rates of credit cards and other consumer credit, and so help prevent illegal loan sharks taking advantage of vulnerable people in debt.
Gareth Thomas MP
Chair, Co-operative party
? Boris Johnson's adviser (Banker bashing may cost the UK �20bn, 25 February) suggests severe consequences from increasing personal taxation of bankers. The stinking fish barrel that is the City probably employs more people directly depriving the UK of legitimate tax revenue than is raised by the direct taxes that these people pay. A thorough examination of the true nature of City activities and its predatory effect here and overseas is long overdue.
Mark Pearse
Bideford, Devon
? Stephen Hester thinks it fair that previous years' losses be taken into account when calculating corporation tax, meaning RBS pays none for the foreseeable future. Funny how this logic doesn't seem to apply to bonus calculations.
Howard Pilott
Lewes, East Sussex
Source: http://www.guardian.co.uk/money/2011/feb/26/mutuals-a-rock-for-banks
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