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Canadian banks got $114B 'bailout' during recession

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posted on Apr, 30 2012 @ 12:55 PM
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Canada's banking system is often lauded for being one of the world's safest. But an analysis by CCPA senior economist David Macdonald found that Canada's major lenders were in a far worse position during the downturn than has ever been previously believed....

Support for Canadian banks from various agencies reached $114 billion at its peak. That works out to $3,400 for every man, woman and child in Canada, and also to seven per cent of Canada's gross domestic product in 2009...

"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," Macdonald said. "Without government supports to fall back on, Canadian banks would have been in serious trouble."




www.cbc.ca...

www.policyalternatives.ca...

Some quotes from Canadian politicians about the supposed stability of Canadian Banks over the past few years:




“…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.” —Jim Flaherty, Minister of Finance8

“Without wanting to appear arrogant or vain, which would be quite un-Canadian... while our system is not perfect, it has worked during this difficult time, I don’t want the government to be in the banking business in Canada.” —Jim Flaherty, Minister of Finance9

“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 Minister10



edit on 30-4-2012 by stanguilles7 because: (no reason given)

edit on Mon Apr 30 2012 by DontTreadOnMe because: attempt to fix link




posted on Apr, 30 2012 @ 12:57 PM
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www.policyalternatives.ca...


Ever since the global financial crisis struck in 2008, Canadians have been subjected to a constant refrain: Canada has the “most sound banking system in the world”.1 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. We knew that as early as 2008 the federal government had made provisions to buy insured mortgage pools from Canada’s banks in order to keep credit flowing during recessionary times. The government was careful to call it a “liquidity support”, not a “bailout” but, as this report reveals, government support for the country’s biggest banks was far more generous than the official line would suggest. Support spanned the course of two years and Canada’s banks turned not only to the Canadian federal government and the Bank of Canada for help during this protracted period, they also took advantage of American bailout programs...

Three of Canada’s banks — CIBC, BMO, and Scotiabank — were at some
point completely under water, with government support exceeding the value
of the company. In March 2009, CIBC stood out for receiving support worth
almost one and a half times the value of all outstanding shares....

The official story of the 2008 financial crisis goes like this: American
and international banks got caught placing bad bets on U.S. mortgages and
had to be bailed out. But not in Canada. Through the financial crisis, Canadian
banks were touted by the federal government and the banks themselves
as being much more stable than other countries’ big banks. Canadian
banks, we were assured, needed no such bailout.



posted on Apr, 30 2012 @ 01:03 PM
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This is a big deal. Canadians have been repeatedly told how their banks didn't receive bailouts, and how their banking system was the most sound in the Western world.

Not often are we given such a stark contrast between what a politician says and what is shown to be true, in such a short period of time.



posted on Apr, 30 2012 @ 01:05 PM
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As a Canadian, I feel as thought I was mislead by our government and am also looking at doing my banking either with a credit union or a bank like TD (not with CIBC, BMO or Scotiabank). I already made the decision to buy only Ford products as they didn't receive funding like other car manufacturers at the time.



posted on Apr, 30 2012 @ 01:13 PM
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Oh, TD received them, too. They just werent quite as bad as the top three.

They also received US bailout money!



Despite the U.S. Federal Reserve preference to keep its loan details secret, it has been far more transparent than the Canadian government — in large part due to enterprising journalists and a two-year legal battle to make the details public. U.S. Federal Reserve bailout details, broken down by bank, are available online.13 At their peak, Canadian banks borrowed $33 billion from the U.S. Federal Reserve in December 2008 (all American dollar figures are converted to Canadian dollars). As shown in Figure 2, all five of Canada’s big banks dipped into the U.S. Fed programs between September 2008 and April 2010 — some more than others. Both CIBC and Bank of Montreal made relatively sparing use of the U.S. Fed programs. Their peak borrowing stayed below $2.7 billion. However, RBC, Scotiabank and TD Bank made significant use of the U.S. bailout program. RBC and TD Bank drew more than $8 billion each from the U.S. Federal Reserve. At its peak, Scotiabank had drawn almost $12 billion in support. The National Bank did not use U.S. bailout money.



posted on Apr, 30 2012 @ 01:16 PM
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Damn it...okay scratch TD...credit unions it is



posted on Apr, 30 2012 @ 01:17 PM
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Originally posted by Ericthenewbie
As a Canadian, I feel as thought I was mislead by our government and am also looking at doing my banking either with a credit union or a bank like TD (not with CIBC, BMO or Scotiabank). I already made the decision to buy only Ford products as they didn't receive funding like other car manufacturers at the time.


In Fact, TD took bailouts while still earning a profit!:



TD is the second largest bank in Canada. Over the emergency support period from the fourth quarter 2008 to the second quarter of 2010 its corporate profits were $6.6 billion.24 It showed positive earnings in all seven of the quarters in which it was accessing government funds. Its CEO Edmund Clark was the 14th highest paid CEO in the country in 2008, taking in $11.1 million that year, which includes the base salary, bonus payments, stock options, shares granted and pension contributions.25 In 2009 he jumped to the 4th highest paid CEO and received a significant raise, putting total compensation at $15.2 million.26


www.policyalternatives.ca...



posted on Apr, 30 2012 @ 01:36 PM
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reply to post by Ericthenewbie
 


If you read the document you would see that TD is included with those banks that received "liquidity support". TD even more so than BMO, CIBC, and ScotiaBank (although TD was never under water, it's estimated they still received support in excess of 26 billion in 2009 - 69% of its stock value).



posted on Apr, 30 2012 @ 01:56 PM
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I bank with the credit union, and even though it can be a pain in the @$$ sometimes it's this kinda stuff that makes me glad that I don't deal with any actual banks. I really just wish that we could install a system that involved having no 3rd party trying to play with my money!



posted on Apr, 30 2012 @ 01:59 PM
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The federal government also extended cash injections to Canada’s big banks through cMhc’s Insured Mortgage Purchase Program (iMpp). This program was by far the largest in term of support with just over $69 billion in mortgages purchased from Canada’s banks. cMhc was not providing loans that needed to be paid back, as was the case with the other two aid programs. cMhc was buying mortgages and, as such, the banks did not need to pay this money back. The cMhc program was thus a straight cash infusion for Canada’s banks. It was cMhc that was left to decide what it was going to do with $69 billion worth of mortgages.


Thats from the policy alternatives. WTF....



posted on Apr, 30 2012 @ 05:43 PM
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reply to post by openeyeswideshut
 


Yeah, it's quite the read, huh?

Massive cash injections, lies for years.

The world economy is #ed.



posted on Apr, 30 2012 @ 07:34 PM
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Now Flaherty is claiming the numbers in the report are all lies.

lol



Finance Minister Jim Flaherty's office said a report by the Canadian Centre for Policy Alternatives is "completely baseless" in its opinion that $114 billion in the form of loans, cash and mortgages was used to save banks. "To be clear, despite conspiracy theories to the contrary, there was no secret bailout," Flaherty's director of communications Chisholm Pothier said.



www.torontosun.com...

Well, then release the official books for the banks you say are so sound, Mr. Flaherty.
edit on 30-4-2012 by stanguilles7 because: (no reason given)



posted on Apr, 30 2012 @ 08:23 PM
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I was initially disturbed by these findings but then I did some digging and am now on the fence on this one. I do recognize that the Sun isn't always a great source but at one point the below article was on their front page and has since been moved but apparently the people that did the report indicate that their own report was incomplete;


It also acknowledged its study was incomplete because it could not get access to Bank of Canada and Canada Mortgage and Housing Corp. documents.


www.torontosun.com...

Before I decide on this issue, I'll wait and see what else comes to light this week (after all it's only Monday)

Just saw the post above got updated while I made my post.
edit on 30-4-2012 by Ericthenewbie because: (no reason given)



posted on Apr, 30 2012 @ 08:33 PM
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Originally posted by Ericthenewbie
I was initially disturbed by these findings but then I did some digging and am now on the fence on this one. I do recognize that the Sun isn't always a great source but at one point the below article was on their front page and has since been moved but apparently the people that did the report indicate that their own report was incomplete;


It also acknowledged its study was incomplete because it could not get access to Bank of Canada and Canada Mortgage and Housing Corp. documents.




Read the report (It's VERY eye-opening) It explains it's numbers and methodology used, in detail (unlike Mr. Flaherty). The numbers are 'estimated' in terms of billions. Not just totally made up (again, like Flaherty's claims appear to be):

In part:


This report builds a composite picture of the extent of Canadian banks’ use of government support by combing through aggregate data provided by the federal government, the Office of the Superintendent of Financial Institutions (OSFI) and the Bank of Canada, as well as quarterly reports of the banks themselves. While the estimates contained within this report have been externally reviewed and are based on the best available data, they should nonetheless be considered approximations of the actual values, until those actual values are released by the Bank of Canada and CMHC (or by the banks themselves).


www.policyalternatives.ca...

The sun has proven itself again and again to be little more than a mouthpiece for the Harper Administration. And they provide no backup for Flaherty's claims.

So on one hand we have actual data, and on the other, we have a government official's word.

You decide.

edit on 30-4-2012 by stanguilles7 because: (no reason given)



posted on Apr, 30 2012 @ 08:54 PM
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reply to post by stanguilles7
 


I'm all for getting the truth as I don't have a pony in this race..

I noticed the report has CAW support and was part of the review of the report...so I'm not convinced this report doesn't have a bias to what it is reporting at the moment.

Also as mentioned above in my previous post, it was policyalternative that indicated their own report was incomplete due to lack of certain documents.

Again, I only want to know the truth.. I'm not defending or attacking either side.



posted on Apr, 30 2012 @ 08:57 PM
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Originally posted by Ericthenewbie
reply to post by stanguilles7
 


I'm all for getting the truth as I don't have a pony in this race..

I noticed the report has CAW support and was part of the review of the report...so I'm not convinced this report doesn't have a bias to what it is reporting at the moment.

Also as mentioned above in my previous post, it was policyalternative that indicated their own report was incomplete due to lack of certain documents.





So have you actually read the report?

That's a good place to start. I've posted the link several times in the article. And like I said, they explain their methodology and sources. They are simply saying they dont have the *specific* numbers (were talking billions), not that they just made the numbers up.

Flaherty, though, has provided nothing other than his word. Me, personally, I'll take the detailed report with an extensive source list over the words of a politician.



posted on May, 1 2012 @ 07:58 AM
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reply to post by stanguilles7
 


To be clear, I read the report and I'm not defending Flaherty on these supposed "secret bailouts".

All I am saying is I'm not willing to naively believe the first and only thing I read. There are a variety of overt/covert agendas at play in this situation and I'm simply reserving final decision until some time has passed to see what else comes to light and who is able to present the unbiased truth on the matter.

In my experience anger and panic usually lead to the first step in the wrong direction is all.

That being said, you are completely entitled to believe/not believe/defend/attack whomever you please.



posted on May, 1 2012 @ 03:21 PM
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Seems that as I expected more information is coming to light;


Originally posted by peck420

Originally posted by stanguilles7
But if you read policy alternatives report, they explain where their numbers DO come from.


Yes, from 3rd party, unconfirmed sources.

Which is actually stated in the report.

The reason is pretty simple. The banks were issued loans (not 'bailouts'). And loans fall under privacy rules, so the Canadian Government can not give details unless the loan recipient agrees, which the banks may do, given enough public pressure.

As of right now, all loans issued by the Canadian Government have been repaid, confirmed by the author of the CCPA report, David Macdonald.


“While these funds were repaid in full, it is clear that the banks benefited enormously from public financing when private funds were unavailable,” wrote David Macdonald, author of the report released Monday.


www.ctv.ca...




posted on May, 1 2012 @ 03:46 PM
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Originally posted by Ericthenewbie
Seems that as I expected more information is coming to light;


Such as what? Flaherty saying they were 'bailouts' but 'loans'.


edit on 1-5-2012 by stanguilles7 because: (no reason given)



posted on May, 1 2012 @ 03:50 PM
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Originally posted by Ericthenewbie
reply to post by stanguilles7
 


To be clear, I read the report and I'm not defending Flaherty on these supposed "secret bailouts".

All I am saying is I'm not willing to naively believe the first and only thing I read. There are a variety of overt/covert agendas at play in this situation and I'm simply reserving final decision until some time has passed to see what else comes to light and who is able to present the unbiased truth on the matter.

In my experience anger and panic usually lead to the first step in the wrong direction is all.

That being said, you are completely entitled to believe/not believe/defend/attack whomever you please.


And to be clear, I'm not emotional. I'm merely saying I am looking at the numbers, including the numbers which show US Bailout money going to Canadian banks, and I see that totally contradicts the government's claims that Canadian banks were solid.

So when i dont take the word of Flaherty as gospel, you can understand why.



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