Murray Dobbin: The Canadian ‘good banks’ myth

[tuvor]

(A couple of weeks old, but...)

The sorry spectacle of Conservative cabinet ministers flying around the world defending banks from a tax to cover their next, inevitable, meltdown is bad enough. What is perhaps worse is that it is being largely justified by the perpetuation of the myth that Canada did not have to bail out its banks.

Wrong.

We are, according to the IMF, actually the third worst of the G7 countries, behind the US and Britain, in terms of financial stabilization costs.

First, we put up $70 billion to buy up iffy mortgages from the big five banks, through the Canadian Mortgage and Housing Corporation, taking them off the banks’ balance sheets. That is almost the exact equivalent the US bailout – it spent ten times as much, $700 billion, and its economy is about 10 times as large.

...

http://murraydobbin.ca/2010/05/22/the-canadian-good-banks-myth/

[Prometheus Bound]

1. That was interesting and very educational.

Scary too.

[Prometheus Bound]

2. Murray removed it from his website, but it can be found here.

http://rabble.ca/blogs/bloggers/alex/2010/05/canadian-good-banks-myth

And he has this newer one up.

A response to the Bankers’ Association
Posted on June 5, 2010 by murraydobbin

When is a bank bail-out not a bailout? When the Canadian bankers’ Association President, Nancy Hughes Anthony says so. In her letter to the Vancouver Sun (which published my blog on the issue) Hughes Anthony points out that not a single bank went bankrupt and therefore did not require a bail out.

But call it what you will - 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.
http://murraydobbin.ca/2010/06/05/a-response-to-the-bankers-association/