Building Societies Now More Liable to Failure

From the Daily Mail

The Treasury is considering allowing mutuals – such as Chelsea, Nationwide and Yorkshire - to raise more funding from so-called non-members. Members include customers with mortgage borrowing and shareholding investors.

Building societies presently can currently only source 50 per cent of their funding from non-members. The ability for societies to source increased funding from non-members would be an advantage if wholesale money markets became cheaper in the future.

Sounds like yet another desperate throw of the dice in trying to inflate house prices.

I'm not sure when the 50% rule was introduced, but its effect in the last boom was that it moderated risk-taking. Nationwide couldn't do the crazy things that Northern Rock did with the money markets because their growth was limited by savers. For government-guaranteed organisations, this is a good thing. But rather than retaining that rather sensible measure, the government are going to scrap it.