"A week is a long time in politics," as former prime minister Harold Wilson once memorably observed.
Skipton Building Society's self-congratulatory chief executive John Goodfellow and his co-directors may now be experiencing feelings not unlike those of the late PM.
For it was Goodfellow who signed-off the press release lauding to the sky his achievements vis-à-vis the Society's 49% leap in half year profits – from £72.3 million in the same period in 2006 to £107.6 million in the first six months of this year.
OK, fair do's. £107.6 million in six months is a helluva lot of moolah, even by the standards of the cosseted financial services industry, although it's but small change compared to say Countrywide Financial, the largest mortgage provider in America. But moreof them later!
In the credit climate that prevailed until two weeks ago, a financial institution run by media studies students could have achieved a similar result.
For the past decade and a half the Western world's economy has lived on borrowed money and borrowed time, fuelled by the runaway boom in consumer credit.
Egged-on by Wall Street, the City of London and senior politicians (Clinton, Bush, Major, Blair and dour chancellor Brown), Brits and Yanks in particular among the globe's citizens made merry on borrowed cash, despite the massive trade deficits that piled up as a result.
Almost irrespective of what they did, and however ineptly, the banks and building societies made a killing, even overcharging for sending a letter telling you about your debt.
On both sides of the Atlantic, people in even the most dire financial circumstances, had credit cards and other borrowing facilities dangled before their noses. And they bit.
Bigtime!
So the snouts in the money trough went on lending and lending and lending – even to folk who could not afford to pay the interest, let alone the full debt. In other words, the so-called sub-prime market.
But the profits-mad goose went on lending the money and laying its golden eggs like there's no tomorrow, in fact of the ten biggest companies in the world, no fewer than 6 are financial institutions.
But of course, there is a tomorrow, and it happened around four weeks ago.
In the USA, the sub-prime leeches found that their impoverished clientele were increasingly unable to service their debts –or, in plain English, make their monthly interest payments.
And lenders began to call in defaulted mortgages … which in turn hit the US housing market values … which in turn began to affect confidence in the stock markets … and so on.
Like a cracking dam, the sub-prime failures triggered a worldwide stock market panic – causing even relatively stable financial lenders like banks and building societies to pull-up the drawbridge.
Whether the crack in the dam will widen to a rupture remains to be seen.
But in the meantime, Skipton Building Society has little cause to pat itself on the back. For it too services the sub-prime market via its debt-collecting subsidiary, the cosily-titled Home Loans Management. And it too is likely to take an almighty fall – along with the rest of the global financial services industry (sounds almost respectable, doesn't it?).
Countrywide Financial, a financial institution besides which Skipton Building Society is around the size of a small flea on a rottweiller, was the bluest of blue chip companies, until this latest crash.
Now?
It's just borrowed $11.5 BILLION to shore up its cash, and is facing bankruptcy.
HML is the tail which wags the SBS dog, and the builder of carbuncles in Skipton. It employs around 800 people in Skipton, whose main occupation appears to be that of chasing bad debt, as far as we can gather. Certainly SBS do not deny that.
Most of its employees come from outside Craven, mainly from West Yorkshire and Lancashire, but could a company as large as HML possibly crash?
Well if Countrywide Financial are in difficulties, then what's the betting on John Goodfellow not being quite so cock a hoop at the next six month's profits?
None of this would matter a tinker’s cuss to The Frog, or you, or any other Craven resident, were it not for the fact that time after time Craven District Council and some of its officers and senior elected representatives obediently bend the knee* to the interests of Skipton Building Society (whose chief executive, after all, sits on the council' members' remuneration committee).
*For example, CDC's approval of the new Home Loans Management office development on a protected site in Gargrave Road – opposed in a council poll by a majority of Skipton citizens, opposed at the only public meeting held to discuss it, (organised and funded by CRAG, not CDC) opposed by 137 out of 139 letters sent to the council, opposed by Local Plan Policy, opposed by the Environment Agency, opposed by the Highways Agency, but GRANTED by Craven district council.
A fine example of democracy in action, and an indicator of who the council listens to!
