OTTAWA—A study released today by the Canadian Centre for Policy Alternatives (CCPA) estimates the previously secret extent of extraordinary support required by Canada’s banks during the financial crisis.
According to the study, by CCPA Senior Economist David Macdonald, support for Canadian banks reached $114 billion at its peak—that’s $3,400 for every man, woman, and child in Canada.
“At some point during the crisis, three of Canada’s banks—CIBC, BMO, and Scotiabank—were completely under water, with government support exceeding the market value of the company,” says Macdonald. “Without government supports to fall back on, Canadian banks would have been in serious trouble.”
Between October 2008 and July 2010, Canada’s largest banks relied heavily on financial aid programs provided by the Bank of Canada, the Canada Mortgage and Housing Corporation (CMHC), and the U.S. Federal Reserve—all at the same time.
Over the entire aid period, Canada’s banks reported $27 billion in total profits between them and the CEOs of each of the big banks were among the highest paid Canadian CEOs. Between 2008 and 2009, each bank CEO received an average raise in total compensation of 19%.
“The federal government claims it was offering the banks ‘liquidity support’ but it looks an awful lot like a bailout to me,” says Macdonald. “Whatever you call it, Canadian government aid for the country’s biggest banks was far more indispensable than the official line would suggest.”
The study estimates the value of government support by combing through data provided by CMHC, the Office of the Superintendent of Financial Institutions and the Bank of Canada, as well as quarterly reports of the banks themselves.
Due to government secrecy, the study raises more questions than it answers. Macdonald calls on the Bank of Canada and CMHC to release the full details of how much support each Canadian bank received, when they received it, and what they put up as collateral.
“A healthy and resilient banking sector cannot operate under the shroud of secrecy. Details of the massive taxpayer support Canadian banks received should be released in the name of transparency and accountability,” says Macdonald. “Financial sector regulation should be strengthened to prevent the need for similar measures in the future.”
Before we collectively wave the Canadian flag re: our banks, read my post above....
To all our American colleagues:
Canadians unfortunately have the attitude that we are somehow special, different and immune to things
because we have 'always done things better'.
The truth is, Canada is very complacent politically and panders to the world, while we at home rest on our socialist laurels, and assume free medical care and subsidized education will continue forever.
While Quebec students protest by the hundreds of thousands, Canadians will sit, content in their living rooms, assuming that it's just polite to do so.
Look at the police state that was created during the G20 in Toronto.
I hear you man,, my grievances go on and on, but it's like yelling in teh forest and nobody hears.. The naivety and apathy has brought me to defection, i am not kidding, I would trade my citizenship pretty quick if I had an opportunity to live in a place with some pride..