At long last, the federal government has decided to seriously address the housing price bubble that has increasingly concerned Canadians.
On the heels of multiple warnings from the Bank of Canada that Canadians have taken on too much household debt for comfort (we hold the dubious distinction of having the worst consumer debt to financial assets ratio among 20 OECD nations), the federal government announced three moves. It will reduce the maximum insurable amortization period from 35 years to 30 years as it scales back both home equity loans and the amount homeowners can refinance. With these changes, we are about half way back to where the CMHC lending standards stood in 2006 when the Harper government significantly loosened them.
The big banks that caused the collapse of the global finance market, and received tens of billions of dollars in taxpayer-funded bailouts, have likely been engaging in wholesale fraud against homeowners and the courts. But in a promising development this week, attorneys general from all 50 states announced a bipartisan joint investigation into foreclosure fraud.
Bank of America, JPMorgan Chase, GMAC and other big mortgage lenders recently suspended most foreclosure proceedings, following revelations that thousands of their foreclosures were being conducted like "foreclosure mills," with tens of thousands of legal documents signed by low-level staffers with little or no knowledge of what they were signing.
Ever since the 2008 financial crisis, Canadian banks have enjoyed almost heroic stature for not being like those bad Wall Street banks that collapsed, triggering a global recession.
Certainly there's been no talk of imposing higher taxes on Canadian banks, to make them help pay for the huge government deficits brought on by the financial crisis and resulting recession.
That wouldn't be fair, since our banks -- unlike the Wall Street banks -- played no role in bringing about the financial crisis.
But why doesn't that logic apply to other groups who also played no role in bringing about the financial crisis?
With the passage of [America's] financial reform bill, giant banks see a golden opportunity to finally put the financial crisis, along with their culpability for wrecking our economy, in the rearview mirror.
"We are very pleased to have this certainty and closure," declared Steve Bartlett when the House-Senate conference committee had finished negotiating. Bartlett is the president of the Financial Services Roundtable, a powerful big bank lobbying group that would like nothing more than to make this legislation the one and only policy response to the banking system's catastrophic failure.
It's up to all of us to make sure that it is not.
It's not often we get a chance to glimpse how power really operates in Canada. Last night was one of those rare opportunities.
At 6 p.m., the men who dominate our financial system assembled at the Hilton Hotel in downtown Toronto. Among them were the CEOs of Canada's five big banks and the top insurance companies. In many ways, this crowd could be regarded as the executive committee of Canada's ruling elite.
They came for a dinner ($1,250 a ticket) to raise funds for a new monetary policy research centre connected to the C.D. Howe Institute. That may sound innocuous. But Canada's top bankers were not getting together to figure out how they can make banking more customer-friendly.
Related rabble.ca story:
The whole issue of the housing bubble, its extent and whether there will be a soft landing as predicted by many wishful thinkers has resulted in many interesting headlines in recent weeks -- including some high on the delusional scale.
One suggested that house prices are a mere 20 per cent overvalued (if you believe that, I have a bridge to sell you). Another that Marc Carney, having solved the housing bubble issue, was now moving on to an allegedly different issue: economic growth. Into this mix rode the cowboy of the big Canadian banks, the Bank of Montreal (BMO), with a replay of its irresponsible low interest rate of 2.99 per cent for a five year mortgage. The last time it did this, for a couple of months in early 2012, it scooped $7 billion in mortgage business.
When your doctor prescribes medication, you need to trust that you are getting the best, unbiased medical advice possible. If those pills just happened to be sold by the pharmaceutical company that gives your doc lucrative freebies, you might be skeptical about that choice of medication. You'd also want to know if the research recommending those pills was paid for by the pill's manufacturer.
This is not rocket science, folks. Medical professionals should 'fess up to any conflicts of interest so that the public can assess whether their advice or research is compromised. Transparency about conflicts of interest in medicine is far from perfect, but we all realize that this ethical principle is the cornerstone of the public's faith in medical advice and research.