STABILITY OF CANADIAN BANKS

STABILITY OF CANADIAN BANKS

Purchasing a home is always a major decision, but you might be wondering whether to buy or sell at this time of year? There are a couple of things you might want to consider.

Interest rates are still at an all time low making this a good time to get preapproval and a guaranteed interest rate.

The typical slowdown in December when people take their homes off the market for the holidays could provide more exposure for your own home if you list now.

The following is an interesting article from the Financial Post - November 2, 2009 by John Greenwood regarding the stability of the Canadian Banking system.

CANADA'S BANKS COST TAXPAYERS NOTHING: SCOTIA CHIEF

In contrast to their ailing peers in the United States and Europe that were propped up with government money, the domestic banks "have not cost the taxpayer anything," Rick Waugh said in a speech to business leaders in Toronto.

Taxpayers benefited from the stability of Canada's big banks because even in the depths of the financial crisis they continued to pay their way in terms of taxes and high government fees, unlike some of their counterparts elsewhere, the chief executive of the Bank of Nova Scotia said Monday.
In contrast to their ailing peers in the United States and Europe that were propped up with government money, the domestic banks "have not cost the taxpayer anything," Rick Waugh said.

His comments come about a week after Mark Carney, the governor of the Bank of Canada, said this country's banks are highly profitable partly because of huge amounts of liquidity provided to them by the central bank and also because of the CMHC's mortgage purchase program.

We are "awash in moral hazard," Mr. Carney said, in explaining that the banks that created the global economic crisis in the first place were again starting to misbehave now that they had received government bailouts.

"We must address moral hazard in the system," Mr Waugh said, before adding that taxpayers should not have to pay for the mistakes of the private sector.

Around the world governments are working to put in place new rules for the financial sector to avoid a repeat of the financial meltdown.

Mr. Waugh warned that Canada needs to move cautiously on the regulatory front so it doesn't damage a system that served this country well in the crisis.

"Right now there are some disturbing suggestions that include overly prescriptive rules being put forward in a number of international jurisdictions," Mr. Waugh said in an apparent reference to the debate over compensation.

He said one of the biggest threats to economic recovery is ongoing uncertainty over potential regulation and how it might effect institutions.

In the wake of the crisis, Canadian banks have been recognized by the International Monetary Fund and various credit rating agencies as among the strongest in the world because they made it through the storm without significant damage from exposure to toxic credit investments.
Still, when the storm was at its worst they did take advantage of additional Bank of Canada liquidity programs and they sold more than $64-billion of residential mortgages to the Canada Mortgage and Housing Corp.

"We paid for those services and we did not get any subsidies," Mr. Waugh told reporters after his speech. "We've remained profitable and we've been paying taxes. Even in our worst quarter -- which was a terrible quarter -- we not only made money but we had enough profits to cover significant dividends... on a relative basis [compared to other major countries] we did not require any direct subsidies. What services we did receive, we paid for.