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Questions for Dunfermline

Douglas Fraser | 07:44 UK time, Thursday, 21 May 2009

Here's yet more evidence of MPs having privileges denied to others.

This time, however, it's not about expenses. You might even be grateful to the Scottish affairs select committee for bringing the former bosses of Dunfermline Building Society to account.

If you were a saver or borrower with the Dunfermline, you were a member of it, and therefore one of its owners.

And you might have a few questions you would want to put to the people who took the decisions to go for much riskier investments than it was used to, and riskier than it was able to handle.

But although the Society had to publish its annual figures at the start of April, it never did, and nor did it have a meeting at which members could question the chairman, the chief executive or their predecessors.

Instead, the Dunfermline was bailed out by the government, taking on more than £1.5bn of its riskier assets, while its mortgage book, branches and head office were joined with the Nationwide.

The only public comment was from former advertising boss Jim Faulds, in the hours before he was forced out the chairmanship, furious at the government and its regulators for suddenly shifting to a forced sale.

The Westminster committee heard on Wednesday from the regulators, who said they had warned the Dunfermline about its unsecured mortgages and move into commercial property.

And in Harrogate, at the meeting of the Building Societies Association, there have been some robust exchanges along similar lines.

Regulators were reminding mutuals they had issued warnings about risky lending, unsustainable margins and over-ambitious growth targets, with exposure to risky loans being taken on even during last year.

Mutuals were conceding there will have to be further government support to get them through this crisis, pleading for a system that is less biased towards banks.

What has just been announced is that the Commons committee - which has formidable powers to call witnesses - has secured an appearance at its next hearing into the Dunfermline's effective collapse from not only Jim Faulds, but also the chief executive who ran it into such serious trouble, Graeme Dalziel, and Jim Willens, the ex-Nationwide executive who took over in December after the damage had been done, but who was central to the rescue process.

There's only an hour scheduled for the three of them on the afternoon of 10 June, but it's more than we've heard so far.

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