The financial regulation fiasco

THE news that in 2008 Irish Nationwide Building Society made a loss of €€243 million, incurred a loan impairment charge of €€464 million and has debts of €2.23 billion maturing this year is another shocking indictment of a dysfunctional, complacent financial regulatory system.

Irish Nationwide cannot continue as a going concern without government intervention and it is very debatable if this course of action should be even contemplated.

The function of a building society is supposedly straightforward. The sole objective, as a mutual, or friendly society, is to use the funds raised from members exclusively for the benefit of members — typically the provision of loans to purchase a member’s main residence; an enterprise normally bearing a moderate, dispersed level of risk.