Canadian banks doing a good job?

[Jack Bennest]

Being a cool and slow Sunday I thought I might throw out something slightly different

I had always thought Canadian Banks were running
the show better than the "Too Many US Banks" but
maybe not so and we could be hit here sometime soon.



Murray Dobbin
Vancouver Sun
June 6th, 2010

The Canadian government borrowed and spent billions to backstop the banks lending during the recession and continues to do so. That borrowing is a cost to the taxpayer and many of the mortgages they bought up (starting with $75 billion in the fall of 2008 and then adding another $50 billion a few months later) could still go into default. If they do the taxpayer is still on the hook – not through the government but through the CMHC, a government backstopped crown corporation that had to be rescued by the taxpayer before. Over 375,000 Canadian mortgage holders are already “challenged” by their monthly payments. When interest rates hit 5.25 per cent, an additional 500,000 will be (challenged).

Read more in the Vancouver Sun blog


http://communities.canada.com/vancouversun/blogs/communityofinterest/archive/2010/06/05/a-response-to-the-bankers-association.aspx

[RationalKeith]

Well, the big advantage Canadian banks had is government was not coercing them to make unwise loans, nor egging people on to borrow what they could not afford (and as a byproduct enablling speculators who could easily walk away from their little-down mortgage), nor running a ponzi-like scheme of increasing numbers with its huge agencies Fannie Mae and Freddie Mac - the causes of US problems.

(Note in the US there were banks smart enough to avoid the mess, such as BB and T who refused to do one popular type of financing because it was not the right thing for their customers - BBandT saw the risk, but get tarred with the same brush as the incompetents.

The economic slump did weed out poorly run companies like GM, except governments bailed them out. (Governments are more wary now, and companies found that the market place viewed bailout funds as a red flag - so now are scrambling to pay bank bailout money.)

I don't see the current finance minister and colleagues as understanding the causes nor the folly of government interference which is prolonging the US' economic problems.

[hagopian]

In a word - no.
Think the USA and our European friends were the only schmucks taking 5/35 mortgages? The CHMC con job makes me sick - because ultimately the Taxpayer backs all those non conventional loans.

Look up recourse and non-recourse loans and you tell me what you see coming down the pike for a lot of folks.

Here in La La land, the debt load is crushing profligate yolks, speeding around in their leased BMW's and thinking that having maxed Credit cards and no equity in the gyproc castle is no problem.

Things have changed and the next few years are going to be very interesting and challenging. Take care to maybe try and have a plan B and pay down that debt and hold on - Canada is not disconnected from the US, and the US is in a world of hurt.....and if they go down, we go down too.

Debt equals lack of economic freedom......no matter what your Banker tells you. They want you to be in hoc up to your ears. Full stop.

Trouble is whole Sovereign nations have used the same clueless spend and burn policy, that many civilians have. There is a whole generation that think these nearly zero rates we have had for the last few years is normal.

Not.
Just wait.