Council's £100k credit union loan was ‘high-risk’ (From York Press)
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Council's £100k credit union loan was ‘high-risk’
9:36am Saturday 26th January 2013 in News
By Mark Stead, mark.stead@thepress.co.uk
CITY leaders were warned they were taking an “extremely high risk” when they loaned York’s doomed credit union £100,000, it has been revealed.
The Liberal Democrats leading City of York Council in 2008 recommended lending York Credit Union almost twice as much as officials said was safe, despite being told the authority would be “at the back of the queue” for repayment if problems arose.
The North Yorkshire Credit Union – which the organisation later became – collapsed in November and the loan was written off.
Records of the January 2009 full council meeting where the £100,000 loan was approved also show former Liberal Democrat councillor Steve Galloway asked for a recommendation that a council representative should join the credit union board and keep a check on its financial position to be altered.
The change, saying the authority should instead monitor the credit union’s finances in a way officials deemed “acceptable”, was agreed.
Coun James Alexander, the Labour-controlled council’s leader, claimed this watered down scrutiny and called for an investigation into the Lib Dems’ handling of the situation.
The Lib Dems accused Coun Alexander of “gutter politics” over the credit union’s demise, saying Labour supported loaning the full £150,000 it requested in 2008.
Officials had said only a loan of up to £52,000 would be “secured”, and the credit union’s lack of assets meant any financial difficulties would leave the council with a “significant loss”.
Coun Alexander said the Lib Dems also approved credit union grants totalling £32,000 “with no scrutiny”.
He said: “Serious questions need to be asked about why Steve Galloway removed the oversight requirement, the council’s then-executive approved more funding than Financial Services Authority guidelines recommended, and further funds were allocated with no oversight.
“Labour has approved a £50,000 grant to the South Yorkshire Credit Union to have a York presence, which is not a loan and is not being used to lend to customers. This credit union has a good business track record and council oversight is being given. We will not repeat the mistakes of the Lib Dem administration.”
Alongside Conservative councillor Paul Healey, Lib Dem leader Carol Runciman has proposed a scrutiny review into how the council monitors external loans and grants, to address “serious questions” about the process.
She said the loan and grants allocated under the Lib Dems were supported by all parties, as were checks agreed by council finance bosses.
Mr Galloway said York Credit Union initially succeeded before “appearing to over-extend itself”, and he made no decisions over it after 2008 as he was no longer council leader and had no responsibilities for financial affairs.
He said: “What must be explained is how, during the last two years, the council’s interests were protected by Labour cabinet members when it must have been clear the credit union was slipping into difficulties.”
Comments(19)
Scarlet Pimpernel
says...
10:17am Sat 26 Jan 13
The Lib Dems accused Coun Alexander of “gutter politics” over the credit union’s demise, saying Labour supported loaning the full £150,000 it requested in 2008.
I bet at the time (2008) Alexander complained that they didn't loan the full £150,000. Typical Labour back-stabbing.
They (Labour) will be blaming Steve Galloway for the 50% affordable housing policy next. This lost York's economy hundreds of millions, and was the idea of Coun Dave Merrett, and as with many policies Labour pressurised the Lib-Dems to adopt many policies which Labour fully supported like this one.
Steve Galloway may have got some things wrong, but, give me him over Alexander any day.
bob the builder
says...
10:39am Sat 26 Jan 13
peterstreet
says...
10:41am Sat 26 Jan 13
Scarlet Pimpernel wrote:You can have him O whining buffoon trying to change the subject!
The Lib Dems accused Coun Alexander of “gutter politics” over the credit union’s demise, saying Labour supported loaning the full £150,000 it requested in 2008.
I bet at the time (2008) Alexander complained that they didn't loan the full £150,000. Typical Labour back-stabbing.
They (Labour) will be blaming Steve Galloway for the 50% affordable housing policy next. This lost York's economy hundreds of millions, and was the idea of Coun Dave Merrett, and as with many policies Labour pressurised the Lib-Dems to adopt many policies which Labour fully supported like this one.
Steve Galloway may have got some things wrong, but, give me him over Alexander any day.
peterstreet
says...
10:47am Sat 26 Jan 13
bob the builder wrote:Another whining buffoon, please read the article,South Yorks has recieved a small GRANT not a loan. Please enlighten us all, o financial expert without par! how many credit unions have failed nationally and how many are suceeding!
Alexander cannot take the moral high ground, his adminstration was going to lend to the South Yorkshire Credit Union, which will inevitably fail given it's customer base will be worse than York's (yes, that it is possible). I said at the time of it's creation that York Credit Union would fail, they were lending to people the banks wouldn't, and let's face it the bank's stopped just short of lending to the homeless!
Keeet Lemon
says...
12:55pm Sat 26 Jan 13
jorvik
says...
1:17pm Sat 26 Jan 13
peterstreet wrote:Ok james
bob the builder wrote:Another whining buffoon, please read the article,South Yorks has recieved a small GRANT not a loan. Please enlighten us all, o financial expert without par! how many credit unions have failed nationally and how many are suceeding!
Alexander cannot take the moral high ground, his adminstration was going to lend to the South Yorkshire Credit Union, which will inevitably fail given it's customer base will be worse than York's (yes, that it is possible). I said at the time of it's creation that York Credit Union would fail, they were lending to people the banks wouldn't, and let's face it the bank's stopped just short of lending to the homeless!
nearlyman
says...
2:00pm Sat 26 Jan 13
Keeet Lemon wrote:It would appear that many of them do not have real jobs..............an
Anyone else fed up of anonymous councillors on this forum , grow the f@@@ up and stop acting like children, it's obvious you don't spend much time in your real jobs!
d frankly..who would give them one ?
York1900
says...
6:22am Sun 27 Jan 13
Hungate
FTR
Sale of St Leonard’s Place and other offices
Pete the Brickie
says...
12:03pm Sun 27 Jan 13
powerwatt
says...
12:19pm Sun 27 Jan 13
Pete the Brickie wrote:I would check who the Chairman was of the credit union before commenting any more. One Cllr Janet Looker. (Labour)
Alexander's right about this, he may well have been willing to lend more but it was the Lib Dems who removed the requirement for a Councillor to watch what was happening to our money which they lent.
Both as bad as each other.
xtc
says...
12:26pm Sun 27 Jan 13
Pedro
says...
5:12pm Sun 27 Jan 13
xtc wrote:Your senses are working overtime.
100k which could ve been better spent on the city and residents!
Paul Meoff
says...
5:15pm Sun 27 Jan 13
Pedro wrote:How many? Is it one, two, three, four, five?
xtc wrote:Your senses are working overtime.
100k which could ve been better spent on the city and residents!
Pedro
says...
6:22pm Sun 27 Jan 13
Paul Meoff wrote:If you don't understand the joke - lucky you!
Pedro wrote:How many? Is it one, two, three, four, five?
xtc wrote:Your senses are working overtime.
100k which could ve been better spent on the city and residents!
piaggio1
says...
10:49pm Sun 27 Jan 13
er like free wifi in acomb/chappy/tanghal
l and most of the **** sites??
this lot are spending OUR money like they own it.
Pete the Brickie
says...
9:09am Mon 28 Jan 13
powerwatt wrote:Fair point, her statement at the time was flippant given the gravity of the situation to say the least when you look back. I can't help but think the council have written this money off too easily though, it was lent to somebody and should be repaid, they chase parking fines to the end of the earth so why not this?
Pete the Brickie wrote:I would check who the Chairman was of the credit union before commenting any more. One Cllr Janet Looker. (Labour)
Alexander's right about this, he may well have been willing to lend more but it was the Lib Dems who removed the requirement for a Councillor to watch what was happening to our money which they lent.
Both as bad as each other.
THE_JABINATOR
says...
12:39pm Mon 28 Jan 13
meme
says...
4:55pm Mon 28 Jan 13
Its our money not theirs to take risks with in vanity and political projects.
The council should stick to providing essential services which is why they are there not invest into white elephants like this and the stadium with our money. Its a classic example of people getting involved with business they don't understand so learn by this and stay out of matters that are not for you
powerwatt says...
10:11am Sat 26 Jan 13
It went on to fail.
I am shocked and surprised that Councillors couldn't manage to run a private venture, but I am sure they will have got something out of it...