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The chairman of one of our regional building societies took me to task a few weeks ago, the complaint being that financial journalists did not distinguish adequately between building societies and banks.
He said his society had never securitised mortgages, never borrowed in the wholesale markets, restricted home loans to no more than 80% of a property's value, would never dream of advancing anyone 125%, and had never bought any toxic collateralised debt obligations from another bank.
But though they are clean and sound, too often his and the other building society mutuals were lumped in with banks as being in the same terrible mess, and largely responsible for causing it. He then pointed out how all the building societies that converted into banks in that great demutualisation rush of the late 1980s and early 1990s had now fallen by the wayside.
Northern Rock, Alliance & Leicester, Halifax, Abbey and Bradford & Bingley had all paid the price of trying to expand too fast and getting into areas they did not understand, and had to be bailed out by a richer rival or the Government. He might have mentioned too how Woolwich got folded into Barclays, Cheltenham & Gloucester became part of Lloyds, and Bristol & West lost its identity within the Bank of Ireland. Contrast these debacles with the fate of Nationwide, the only building society of any size to resist demutualisation. It continues to flourish and provide a service its customers clearly value.
Even if the media do not fully appreciate that building societies have behaved themselves, the public seems to. Figures yesterday from the Building Societies Association show an astonishing surge in the number of new savings accounts recently opened with societies, and an even bigger leap in the volume of saving. The Coventry, which reports today, underlines the point but it is true across the board. There is a flight to quality and a flight to safety, and the societies are the beneficiaries.
Meanwhile, a just-published leaflet from the BSA shows how far off the pace the banks are when it comes to customer service, which ought to be what their business is all about. In a comparative study of attitudes to banks and building societies, respondents were asked whether their provider treated them fairly, whether they trusted their provider to give them good advice, whether the provider offered reasonable value for money and whether they would recommend the provider to friends or family.
The societies' lead over the banks ought to make the latter's executives hang their heads in shame as they collect their bonuses. But what ought to concern them even more were the negative scores - those who hated their banking experience. In every question, the banks had a hard core of people who loathed them. The building societies had almost none of that.
This underlines that the real story is one of trust. Banks, and to a lesser extent insurance companies, are more and more anxious that the public begins to trust them again, and considerable brainpower is being extended to find ways to bring this about. Meanwhile, the societies show the best way to foster trust is not to lose it in the first place.
Once gone, it takes an age, possibly a generation, to restore, and it is probably a sign of how much the banks have lost the plot that they don't seem to get this. They seem to think a few neat advertising slogans, and a bit of chief executive humility will do the trick. Perhaps in 10 years' time, they will realise it is not going to be that easy.
The blame lies with Bond
HSBC chief executive Michael Geoghegan said yesterday that hindsight was a wonderful thing - and with hindsight, he wished that HSBC had not bought into the US subprime market by acquiring Household Finance.
The implication is clear enough - it is another version of the oft-repeated bankers' mantra that "no one could possibly have foreseen the extent of the current downturn..."
Except that it is not true. The proposed acquisition of Household brought howls of protest, not least in this column because it was such a departure from all HSBC stood for.
In the years before the purchase, Household had a reputation as a seriously nasty organisation. It took only 30 seconds for a Google search to throw up information on a stream of Congressional inquiries into its lending practices and accusations of loan sharking, extortion and racketeering.
Even allowing for the hyperbole of the American legal system, this showed that at the very least the organisation had its critics. It means that HSBC's directors, assuming they know how to Google, must have been unaware what they were getting into only because they made no effort to find out.
So spare us the bleatings about hindsight. Hindsight has nothing to do with it. A dysfunctional board too dominated by the then executive chairman Sir John Bond might be nearer the mark.
