Canadian Banks got $114B from governments during the recession that started in 2008
A CBC Headline from 2012 noted Canadian Banks received a bail outs during the recession that started in 2008, a headline that I missed and I suspect most of us did. A 2012 report from Canadian Centre for Policy Alternatives April 2012. In terms of financial crisis one would expect the federal Government and its agencies would and should provide a level of support and stability to our banks.. What surprised me was how much of the support came from the US or more specifically the quasi government but real private company Federal Reserve Board (Fed). Raises the concern, are Canadian Banks just another part of the US banking system.
The CCPA report The Big Banks’ Big Secret by David Macdonald takes an indepth look at the bailouts. When I contacted the CCPA to see if they felt the Fed bailouts for Canadian Banks would happen again. I was assured changes had been made and it was doubtful it would happen again. We frequently hear that Canada has the “most sound banking system in the world” or at least that was the line that the then minister of Finance Flaherty was quoted as saying in a Globe and Mail article that is no longer available. The then minister backs the statement up with a Government of Canada report noting the World Economic Forum has said “we have the safest in the world our banks are the safest in the world,” so of course we should take that as an assurance in the same way the covid vaccines were safe and effective. The WEF said the vaccines were safe and effective in Feb 2022 . Assessments such as these coming from an august body as the WEF, then we should rest easy that our banks are safe, shouldn’t we.
During the worst of the crisis — 2008 to 2010 — the official line was that Canada’s banks did not require the extraordinary bailout measures that were being offered in other countries, particularly in the U.S.
I know I should not confuse you with the facts, but I can not help myself;
“Between October 2008 and July 2010, Canada’s largest banks dipped into programs provided by the U.S. Federal Reserve, the Bank of Canada and the Canada Mortgage and Housing Corporation (CMHC) — all at the same time. Both the U.S. Federal Reserve and the Bank of Canada offered short-term collateralized loans which peaked at $33 billion and $41 billion Canadian dollars respectively. CMHC was buying mortgages directly from the banks after they had been converted to mortgage-backed securities. By the end of this program, CMHC had purchased $69 billion worth of mortgages.
At its peak in March 2009, support for Canadian banks reached $114 billion.”
The support amounted to the comparable of every Canadian being paid $3,400 or 7% of the 2009 Canadian economy. The support was not limited to the big banks, the smaller banks in Canada also received support.
For a while 3 of the major banks received more support than the corporate value of the bank or in other words they were bankrupt. It would have been cheaper to nationalize these under performing banks. By 2012 all the support had been repaid and at least for a time with the assistance of the Canadian Government and the Fed in the US the collapse of the “safest banking system in the world” was averted.
When the these banks were not performing well and in financial stress one would think the remuneration and benefits for the CEOs would reduce but for some reason that eludes me the under performing CEOs were rewarded with increases in the order of millions of dollars.
When Minister Flaherty stated “we have not had to put any taxpayers’ money into our financial system in Canada, nor do I anticipate that we’ll be obliged to do so.”(in this statement while technically correct it was not taxpayer funds that were used but it was taxpayer assets used)
—Jim Flaherty, Minister of Finance Speech At Canada-U.K. Chamber Of Commerce
“It is true, we have the only banks in the western world that are not looking at bailouts or anything like that...and we haven’t got any TARP money.”
—Stephen Harper, Prime Minister CNBC, Interview on the Kudlow Report, February 23rd, 2009.
Troubled Asset Relief Program (TARP) was a U.S. government program created to stabilize the financial system during the 2008 financial crisis.
Harper said this in the middle of when the bailouts were occurring, while he may be playing word games by saying we had not received TARP money we at the time he said this had received Fed money under a program similar to TARP.
I have a serious problem when we as a supposedly sovereign nation are going to another country for bailouts for our financial system. Who owns Canada? Would appear we have given up control and ownership of our country to some foreign entity, are we just a line item in some hedge fund’s balance sheet?
Would appear our current Prime Minister is not the first one that has a difficulty being honest with the people, unfortunately I doubt he will be the last dancing to the foreign owners tune.
The Federal Reserve Board in the US bailed out Canadian banks