The Cooperative Bank is finished but we need democracy in banking

This is probably the end of the Cooperative bank, a result of the long decay of a  cooperativism which has ossified and  become a parodying of corporate business capitalist management.  It’s  “ethical” policy at least  screened some of worst investments.  It acted in the main too much like the other Banks, including miss-selling. The shock might open up new thinking and doing which points in another direction.  Work will have to be done to make this practical, useful while retaining integrity and guided by a set of  democratic principles conducive to benign social and ecological practice.  A mutual fund might be a start to underwrite a new emergence. as a base, other components need bring into play. This eventually can be basis for a Democratic Peoples Bank supporting people in communities, democratic enterprises and small businesses embedded in communities  Can this be done and how?

Despite  the spinning, the Cooperative Bank is finished as anything  a cooperative bank. This has been long in the making as the Cooperative Group an amalgam of consumer cooperative societies , may still be asset rich but its cooperative heart beats weakly.   Over generations it lost its way, giving way too much to corporate management  values imported from business  schools. Democratic enterprises need their own norms and practice if their integrity is to be maintained.  This is very difficult in a society and economy dominated by corporate and financial capitalism. So the need to work out a set of norms, structures , co-ordination, governance with appropriate training, that engages members in what ever stakeholder category they belong. These will need to be flexible enough allowing a variation of outcomes conducive to benign outcomes for a range of possible lives and are solutions to needs.  This will need to distribute and  build up personal wealth while also build up  democratic commonwealth for the community of stakeholders. The fabric of the democratic enterprise need to be equitable, so at least providing a living wage and bound by  wage solidarity, so differentials are  kept to a human scale, for example about 10:1.   There are decent folk who operate within the consumer cooperative movement but there is also self-serving bureaucratic indifference which prevails especially at the top.   The demise of the Cooperative Bank  was long time coming. The trend   has been masked by a slight improvement of performance by bringing in management from the corporate and financial capitalist world. They of course have helped shape the enterprises into something which is native to them but in so doing they have further weakened  the cooperative character remaining. The end of the Cooperative bank as a anything meaningfully cooperative is the result. But this end might open space for new possibilities.

The Cooperative Bank was a PLC owned by the Cooperative Group so a Bank at least nominally for the cooperatives but it is now  largely owned by hedge funds,  these people play a hard ball game  so the bank is fully exposed to  rapacious usury and rentierism that the financial and stock markets tend towards,  profit maximization for the top executives and shareholders will be the guiding light. The illusions marketed by the Cooperative Group are now cruelly exposed, many loyal active members,  a minority will be hurt, they have been duped. The new owners might mouth the term ‘ethical”  but their take over was ruthless and they will say anything to prevent a mass of withdrawals from the bank.

For years there have been rumors around both cooperative and trade union circles of self-serving behavior by functionaries,  This happens when membership participation is passive or low. If a small coterie runs a mutual organization with  poor accountability  then this will  happen and the enterprise will become zombie as cooperative or mutual.  It is important for any democratic enterprise that there is a healthy relationship between administrators and members.   The directorship must be in hands of the membership.  Administrators, coordinators, and functionaries need clear mandates  together with the  means to do their jobs. A fair relationship of trust needs to be established, freedom to do the job while answerable to an alive membership. Communication and transparency are vital.  With worker cooperatives which are usually smaller, management may vary from a high degree of member participation to formal management mandated but answerable to worker members.

There is a need to develop a new current of ideas, action and practice which is semi-detached from  the politics and economics of institutional power. One might conceive it as a  secular non conformist  movement supporting  the democratizing the economy.  Such a movement could be accessible to spectrum of opinion but united around these issues.

Recreating a Peoples Bank under multi-stakeholder  democracy might be a start as an aim.   It could act as a financial hub. This  might  be developed by converting a mutual such as a Building society or one of the bigger Credit Unions into a bank. Credit Unions are  probably still too small to be the basis of a Bank.  However if the larger credit unions were allowed to act as a federated matrix they might act in bank like way within a fairly short span of time. Is such a possibility do-able?


Since writing the above the Ethical Consumer has appealed  to account holders of the   compromised Cooperative Bank to hold back from closing their accounts while a Save Our Bank campaign is attempted. They need luck and all the support they can get.  At present this might be the best we can hope for.  Time will tell but this may be an aspiration too far and other options might be needed.  What ever happens  questions should be asked?  Though the restoration of the Cooperative Group as a living cooperative is a challenge..  We need to development a culture of stewardship of  the commons, cooperatives and mutuals have common interest aspects to them so these require active membership to care for them, they need TLC.

PS Added Nov 7th.  : It seems very unlikely that the Cooperative Bank can be rescued in any meaningful way as cooperative.  If this becomes clear over the next few weeks then an option to consider, which has mutuality and at least a democratic foundation even if weakly applied, are the credit unions that run current accounts.  This has some limitations but supply debit cards and standing orders can be set up.


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