Why Canada's Banks Don't Need Help

[ConcernedCanuk]

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Why Canada's Banks Don't Need Help

By Erik Heinrich Monday, Nov. 10, 2008


Scotiabank, along with other large Canadian banks,
is faring better than its U.S. peers
Jonathan Hayward/Canadian Press/AP


In the midst of the worst financial crisis since the Great Depression, Canada has joined the ranks of governments that in recent weeks stepped up to help banks cope with more fallout from bad subprime mortgages. In Canada's case, however, the reason for the assistance is a little different from some of its G7 partners. Unlike banks in the U.S., Britain and Germany, which needed to be bailed out with hundreds of billions of dollars in new capital, Canada's major banks are solid and solvent. They don't need any help to work through their subprime exposure.


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Why has Canada withstood the subprime tornado better than other countries, and should the Canadian banking system be a model for G7 and G20 leaders when they gather in Washington on Nov. 15? Consider that the Geneva-based World Economic Forum, an influential think tank whose annual conference attracts the likes of Bill Gates and Tony Blair, earlier this month ranked Canada's banking system as the soundest in the world. The U.S. came in at No. 40, Germany and Britain ranked 39 and 44 respectively. (Switzerland was No. 16 just ahead of Namibia.)


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There is of course a flip side to Canada's regulatory system, and when the global economy was flying high, Canadian banks complained about not being allowed to merge to become more significant international players. "In hindsight, that decision may have saved Canada from having a Royal Bank of Scotland on its hands," says Lawrence Booth, a finance specialist at the University of Toronto's Rotman School of Management, referring to the overly ambitious bank's bailout earlier this month by the British government.

Says Finance Minister Flaherty, "The credit crisis we're facing is the result of unbridled greed. We need to bridle greed." Perhaps when world leaders sit down in Washington next month to forge a 21st-century New Deal for the global financial system, it may have more than a smattering of Canadian banking know-how.

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"Canada's banking system as the soundest in the world"??

Oh my . .

Oil, land, water, universal health care, sound banking system . . .

now,

if'n we can just dump Harper somewhere . . . .

[HeresyLives]

1. Too late, he already blew

the surplus with that dumb GST cut, and the misadventures in Afghanistan.