The ‘secret’ Canadian bank bailout

You’ve probably noticed lots of eye rolling around here anytime someone mentions how Canadian banks are so different from US banks.  The Canadian Centre for Policy Alternatives is now pointing out in a report that Canadian banks actually received a multibillion dollar bailout from October 2008 to July 2010.  The government is being accused of offering ‘liquidity support’ that is much higher than originally reported.

All told, the study counts $114 billion worth of guarantees and financial aid for Canada’s big banks from government agencies such as the Bank of Canada and the Canada Mortgage and Housing Corp.

MacDonald combed through financial reports from government institutions as well as quarterly reports from the banks themselves.

He says the government has been obfuscating the true cost of supporting the banks.

“A healthy and resilient banking sector cannot operate under a shroud of secrecy. Details of the massive taxpayer support Canadian banks received should be released in the name of transparency and accountability,” MacDonald said.

They also point out that the heads of Canada’s big banks received large raises during the time this ‘liquidity support’ was offered.

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I got this from my US Citibank today. It’s quite amazing how the tone has changed from back in the day. I wonder how long it will be until Canadian banks start sending out emails like this: ———— Your Best Investment? The Pros and Cons of Owning a Home By Jonathan Clements, Director of Financial Education, Citi Personal Wealth Management Almost seven out of 10 American families are owners rather than renters—with good reason. Congress has showered real estate with tax breaks, making it possibly the most tax-favored investment. Indeed, even after the recent slump in property prices, many folks boast that their home is the best investment they ever made. Homeownership also has enormous emotional appeal. We like to own the four walls that surround us. We tend to show far greater patience with real estate than with, say,… Read more »
rp1
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rp1

@crashcow: “Correction: it’s always a good to time to buy OR sell.”

True in the boolean logic sense.

patriotz
Member

@Anonymous:
“Bonds don’t come with zero risk. Not when rates have nowhere to go but up.”

Good thing there’s no interest rate risk to RE, eh?

Ulsterman
Member

@jesse:

My mother-in-law manager three buildings in S Granville, located much nearer all the stores from Broadway up to 16th than the building in the link. She says rents are facing constant downwards pressure. The owners pressure her to raise the rents $25-50 / month once a suite becomes vacant and then frequently watch them sit vacant for a month. They then have to reduce the asking rent back to the original amount.

I think the realtor is being very optimistic if they think they can raise rents 42% through upgrades.

Anonymous
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Anonymous

@frenchy:

Bonds don’t come with zero risk. Not when rates have nowhere to go but up.

Makaya
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Makaya

@crashcow: lol

Makaya
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Makaya

@mac: “boire du petit lait” means to be very please to hear/read something.

In this case, zerohedge wrote an article months ago about the not so strong Canadian banks for which they’ve been heavily criticized (Garth called them “uninformed”). And now with this report out, it turns out they were, well, right…

SourLemon
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SourLemon
Absinthe
Member
Absinthe

I haven’t wanted to get my hopes up that the Vancouver goose is finally cooked, but I’m pretty pleased with those April numbers. If May looks similarly, I’m going to permit myself a small hope or two.

mac
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mac

@Makaya: Qu’est-ce que ca veut dire exactement? Le petit lait?

crashcow
Member

@Makaya: Correction: it’s always a good to time to buy OR sell.

stagnate
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stagnate

i’ve said it before, will say it again; canada has a socialized banking system and ergo (by extension) a somewhat socialized real estate market. hard to know what flarety is really thinking with the cmhc. i tend to think he’s pulling a carney and not really talking straight. he either assumes his audience is stupid, or maybe he’s stupid. or maybe ideology is really important to him. canadas reflationary system is the envy of the world. don’t be fooled by current economic calmness. eventually debts will need monetization and canada has a model for the future. might not matter for a year or two but five to ten years out what flarety does or doesn’t do with the cmhc is critical.

Makaya
Member
Makaya

@jesse: Agree but in my mind, if you have lots of equity in your house, it’s always good to sell since you can invest the capital and use whatever it generates to pay your rent and basically “live for free” while waiting for the market to make sense again.

I suspect that those people will enjoy the renter’s life of not having to worry about maintenance, repairs, property taxes and all the goodies that come with ownership, while having a fat bank account. What’s not to like about it?

jesse
Member

@Makaya: I doubt a 1 year lease will be enough. I know a few people who bailed in 2007 too. In real terms, depending upon where and what type of property, they made a good decision even back then compared to current prices. Others… not so much. That’s gotta smart and I’m sure those stories stick with those who are considering selling this year.

Makaya
Member
Makaya
Selling and renting is now mainstream… Ready to be bold? Sell the house and rent “Our bubbly housing market raises questions not only about the wisdom of buying right now, but also about selling. What if you bought a home many years ago and had the opportunity to lock in a great profit while the market is still buoyant? A Vancouver woman and her husband answered this question recently by selling the family home and signing a one-year lease on a rental. “We bailed,” said the woman, who asked to be anonymous in this column. We’ll just call her Ms. Bold. She and her husband have been having annual talks about whether to sell since 2008, when the housing market briefly plunged. This year, they agreed it’s time. “When you look at all the statistics, it just doesn’t make sense,”… Read more »
good-format
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good-format

Sales are the lowest in 10 year.

13% below 2011 (3225) and 19% below 10-year average (3478)

good-format
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good-format
Copied from PaulB’s number http://www.laurenandpaul.ca Date Listing Price(+-) Sold Inv Inv(+-) S/L(%) Apr-02 450 139 125 16,074 27.8 Apr-03 319 133 224 16,124 50 70.2 Apr-04 302 131 147 16,230 106 48.7 Apr-05 277 118 117 16,345 115 42.2 Apr-10 403 211 159 16,475 130 39.5 Apr-11 416 151 202 16,618 143 48.6 Apr-12 333 140 103 16,736 118 30.9 Apr-13 289 146 150 16,807 71 51.9 Apr-16 341 170 137 16,883 76 40.2 Apr-17 280 177 179 16,893 10 63.9 Apr-18 301 146 170 16,971 78 56.5 Apr-19 251 127 129 17,025 54 51.4 Apr-20 238 131 85 17,137 112 35.7 Apr-23 309 175 150 17,195 58 48.5 Apr-24 343 145 218 17,220 25 63.6 Apr-25 292 130 160 17,279 59 54.8 Apr-26 264 132 130 17,368 89 49.2 Apr-27 229 125 95 17,455 87 41.5 Apr-30 316 179… Read more »
jesse
Member

@Anonymous: If that’s the case then the play is to jack up the rents.

patriotz
Member

@Anonymous:
If the current rents in the building were being constrained by rent controls, you’d see a significant divergence in rents for identical units, because they can charge any rent they want when new tenants move in and inevitably you’re going to get some turnover in a building that size.

Do you see that? I don’t.

VHB
Member
VHB
	April		
	sell	list	sell/list
2001	2253	3556	63.4%
2002	3785	5215	72.6%
2003	3095	4139	74.8%
2004	4106	5665	72.5%
2005	4043	5731	70.5%
2006	3345	4452	75.1%
2007	3490	5724	61.0%
2008	3218	7010	45.9%
2009	2963	4649	63.7%
2010	3512	7648	45.9%
2011	3225	5847	55.2%
Mean	3367	5421	62.1%
median	3345	5665	67.1%
VHB
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VHB
Apr-2012	
Total days	19
Days elapsed so far	19
Weekends / holidays	11
Days missing	0
Days remaining	0
7 Day Moving Average: Sales	145
7 Day Moving Average: Listings	289
SALES	
Sales so far	2804
Projection for rest of month (using 7day MA)	0
Projected month end total	2804
NEW LISTINGS	
Listings so far	5953
Projection for rest of month (using 7day MA)	0
Projected month end total	5953
Sell-list so far	47.1%
Projected month-end sell-list	47.1%
MONTHS OF INVENTORY	
Inventory as of April 30, 2012	17530
MoI at this sales pace	6.25
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@paulb.:

Nice way to start the week. Thanks Paul!

VMD
Member

@paulb.:
thank you Paul!
seems like
April 2012 vs 2011
Sales: -13%
New Lists: + 2%

April vs March:
Sales: -2.4%
New Lists: + 2%

*need to wait for official stats for final tally

Anonymous
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Anonymous

@jesse:

Did you read the link in full? There’s a list of all the units and how much rent each one is currenty paying. They sound on the (very) low side to me. I’d imagine that many of its current tenants have been there for a long time.

paulb.
Guest
paulb.

New Listings 316
Price Changes 179
Sold Listings 124
TI:17530

http://www.laurenandpaul.ca

paulboenisch@gmail.com