A think-tank claimed that Canada's banks secretly received billions from the government to bail them out during the recession. Toronto Sun says this is pure leftist propaganda for the May 1st crowd and occupy protesters.
CBC News reported April 30th that Canada's banks received billions of dollars in government funds during the recession like their U.S. counterparts. The only difference is, the Canadian bailout was carefully concealed and shielded from public scrutiny, or a secret bailout.
A report released by Canadian Centre for Policy Alternatives (CCPA) claims that Canada's biggest banks received support from various government agencies that reached $114 billion at its peak. That works out to about $3,400 for every man, woman and child in Canada.
The CCPA economist that released the report said he concluded after receiving data from government agencies and the banks themselves that some of Canada's biggest banks, CIBC, BMO and Scotiabank, "were completely under the water, with government support exceeding the market value of the company." He said the banks would've been in serious trouble without government assistance.
One of the major vehicles for the bailout was the Canada Mortgage and Housing Corporation (CMHC), whereby CMHC took mortgages off the balance sheets of big Canadian banks by purchasing them. Although they were not funds that had to be paid back to the agency, the Canadian Bankers Association (CBA) denies that it was a bailout. CBA said the support came to help consumers obtain credit, not because the banks were failing. However, government support amounted anywhere from 69-percent to 150-percent of the companies' book value at that time. CCPA says it would've been cheaper for the government to buy the banks' shares.
Canadian banks also dipped into a fund set up by the Federal Reserve to keep U.S. lenders afloat. CCPA says that in spite of requests made under the Access To Information Act the Bank of Canada refuses to release any information to help it complete the analysis.
U.S. bank bailout, which was executed in the last days of the Bush Administration and signed by president-elect Obama, has haunted President Obama for the past four years. By contrast, Canada's Finance Minister Jim Flaherty maintained that Canada's banks were the envy of the world even during the recession and no government intervention was necessary. Maybe not so.Toronto Sun says this is a conspiracy theory, pure leftist propaganda for the May 1st crowd and occupy protesters.