[as originally posted 01/25/09 on my formerly free thinking blog http://tworippingarseholes.blogspot.com ]
"The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy."
[President Abraham Lincoln - 1863]
"The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy."
[President Abraham Lincoln - 1863]
"The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it."
[John Kenneth Galbraith, Money: Whence it came. 1975, p29.]
[John Kenneth Galbraith, Money: Whence it came. 1975, p29.]
"This is January; named for Janus. Janus looks forward; but Janus also looks backwards. And if you don't look back, you don't know what might be hitting you on the other side."
[Rep. Stephen Cohen (D) - January 2009]
[Rep. Stephen Cohen (D) - January 2009]
Does anyone remember our friggin' Finance Minister Flaherty telling us last October how our "High banking standards have kept Canada's financial institutions afloat and out of the kind of trouble that has sunk many of their international peers"? Anyone??
Well, fellow travelers, a lot has changed since then. As such, We Two Arseholes are taking a look back in order to divine what may be about to smack us upside our collective heads in Dim Jim's upcoming Budget. Now, we are not going to dwell on the gum-flapping moron's infamous fall declaration saying there would "be no deficit on his watch, even on a temporary basis". Face it, this week's confirmation by the Tories that they will run a $64-billion deficit over next two years shows they were always lying on this count.
No, what we are talking about is the salient part of that day's story; the positive part, the reassuring part - the truthful part. You see, in October, Dim Jim was lauding Ottawa's strong regulatory system as the prime reason our "banking industry [was] more secure than financial sectors in the United States". And, for once, he was right. Compared to other G-8 countries, our prudent banking rules have been instrumental in insulating us from the fiscal nadir and bankruptcies others are experiencing. And today?
What of today?
Well now it seems Harpo & co. are about to undo that which has spared us from the horror show we are witnessing in the US, to wit:
THE BANK ACT (CANADA) - Section 401.2 (1) Constraining registration: Crown and foreign governments - No bank shall record in its securities register a transfer or issue of any share of the bank to:
(a) Her Majesty in right of Canada or of a province or any agent or agency of Her Majesty and in either of those rights; or
(b) the government of a foreign country or any political subdivision of a foreign country, or any agent or agency of a foreign government.
(a) Her Majesty in right of Canada or of a province or any agent or agency of Her Majesty and in either of those rights; or
(b) the government of a foreign country or any political subdivision of a foreign country, or any agent or agency of a foreign government.
Now, in true Orwellian fashion, we are being told to buy into the new Bizarro-Harpo-Vision - to see the world anew. Now, what once was good - is bad; and what once was strong and true about Section 401.2 - is now, apparently, weak and false. You see, Dim Jim has now been told by Harpo: "You don't believe in the merits of strict regulations barring foreign ownership of our banks anymore. No Simple Jim, what you now believe is something else altogether different."
"Huh, boss?" Jim dithers as he asks, "say that again?"
"Well, you see Jimbo, we've decided you are no longer a staunch defender of Canada's current 'high banking standards' that bar other countries from buying up our banks. In fact, you are now to say that Section 401.2 is a barrier to recovery. Got it?" Dim Jim nods. "And you are going to reaffirm that we will buy up $75-billion or so of Canadian bank mortgages with Canadian tax dollars."
So why are the Tories going to gut our banking regulations during this crisis? Well, the answer to that is simple: the greed of Canadian bankers knows no bounds and Tory desperation knows no limits. In short, Harpo would rather appease Canada's usury bankers who want to play Russian Roulette with our tax dollars than stand up for the the ideal that our banking industry should be sovereign and free from undue foreign influence.
Canadian Bankers, sense they can use Canada's collective 'sky-is-falling' angst to their advantage. They are preying on the insecurity of the consumer as they seek to proffer a Grand Narrative which argues for access to new capital investment from anywhere and everywhere - even if it comes from the same foreign fiscal interests who got us in this mess to begin with. Place this greed imperative in the same room with Harpo's politically reptilian impulse to survive at all costs; and what we have is every likelihood that the Banker's will get what their amoral-dividend-seeking-hearts desire most - even more Canadian tax dollars on Tuesday, with the added bonus of now being allowed to access untapped capital from sovereign wealth funds.
You see, thanks to Harpo & co.'s December brain-fart, the banks have come to realize that they are the one's truly in the driver's seat on the economy. And, as such, they have decided to force Ottawa to think the unthinkable, to allow the un-allowable, and to endorse the reprehensible: To repeal Section 401.2 to facilitate foreign purchases of Canadian domestic bank stock; thereby doing away with the very safeguard that helped shield Canada's institutions from the virus plaguing other western banks. What they want, amid the confluence of today's stress, strain and panic, is to forge is an unholy union with the very capital markets that wrought the current plague. 'But Arseholes," you say, "how can you possibly know this?"
Well, this week, as the entire world was focused on Obama's Inauguration, a little-big story entitled: "Rule change would allow Ottawa to buy bank stock" appeared in the Report On Business. Quoting Friggin' Flaherty, it highlighted what Harpo & co. really want to do is to change "little-known rules that prevent governments from owning shares of Canadian banks and insurers". A move, incidentally, that would allow Ottawa "to inject capital into banks ... [and] make it easier for Canadian financial institutions to pull off foreign takeovers, and ease the way for sovereign wealth funds to invest in institutions here." Hmmm, We Two Arses wondered? Why would Harpo & co. do this now? Given present global market conditions this doesn't sound like a very desirable state of affairs for the Canadian tax-payer or depositor . Hmmm.....
Well, we read here that recommendations generated by Finance Minister Jim Flaherty's "working group made up of officials from the chartered banks, government and Crown lenders" to fix the commercial paper market are likely "to find their way into Tuesday's budget." Hmmm... interesting? Does anybody else wonder if these recommendations might include a move to repeal Section 401.2? Might this be the poison pill Flaherty is going to bury in the textual ass of next Tuesday's budget?
Hmmm? Are we crazy?
Maybe not. When the President of the Canadian Banker's Association (CBA), Nancy Hughes Anthony scolded the Globe & Mail in November for missing the point in its story "Ottawa Bows To Banks To Keep Credit Flowing", she wrote "The real headline is that both the banks and the federal government share a common goal and continue to co-operate to find solutions that are in the best interests of Canadians". Hmmm, but maybe she neglected to tell us everything about the 'solutions" the CBA were advancing. Maybe, what she meant to say is: the CBA would only play ball if it was promised that those "solutions" included new provisions for access to foreign capital investment. Maybe, the fact is that Canadian bankers have been slow to vociferously back the Tory stimulus scheme because they want Harpo's parrot, Friggin' Flaherty, to first grant rule changes that would give Canadian Banks unfettered access to what they see as a cash infusion bonanza from foreign governments.
Maybe, this is the price the CBA has exacted from Harpo & co. in order to be seen as onside with the Tory's massive new 'stimulus' programme. Could it be that Friggin' Flaherty is willing to sell out Canadian taxpayers and depositors at this time because Canadian bankers have made regulatory change the price for their full participation in Harpo's recovery scheme?
Oh, Harpo, say it ain't so! Say it loud and say it in the Budget.
But, alas, We Two Arseholes fear that, in fact, Friggin' Flaherty and Harpo have already made the deal. We fear there is every chance that a formal announcement of Ottawa's intent to change the regulatory laws will be this Budget's poison pill.
So let's recap and posit. Our Bank Act currently prohibits “the government of a foreign country or any political subdivision of a foreign country, or any agent or agency of a foreign government” from owning shares in any Canadian bank. Okay, seems like sound policy to us. After all, who wants foreign governments having any say in how much capital OUR BANKS can, or, cannot lend to OUR business and consumer sectors. And who wants foreign interests influencing, or, having a direct hand in setting what OUR domestic banks set as their prime-lending rates? Certainly not us. Bad enough that Flaherty has already spent $33-billion of our tax dollars to buy up Canadian mortgages and plans to "buy up as much as $75-billion" overall to "free up" lending capital for Canadian Banks? Do we really want offshore sovereign wealth funds having a say in the amassing of more such mortgages just so they can then turn around and sell them to OUR federal government to improve THEIR stockholder value? No.
Ironically, the $33-billion Friggin' Flaherty has already spent is equal to the size of the announced deficit for this budget. But nobody is talking about this. Nobody seems to see a problem here. We mean, what else does our government have to do for our "sound banking system" in the current crisis? Must Ottawa now start buying stock? Jesuz-Christos! You'd figure that committing $75-billion Canadian tax-dollars to purchase the bank's mortgage holdings would be enough of a stimulus for the industry - no? Also, you'd figure that foreign investors in Canadian banks should be barred from benefiting from this questionable use of OUR tax dollars. No?
Now it might well be that what our banks really want is to secure our tax dollars because they will help "make it easier for the country’s banks and insurers to make foreign acquisitions". Even if this is the case, the whole premise seems like folly to us. Speculating on and purchasing stock in 'cheap' US banks when their domestic market is in the toilet hardly seems in to be in the best interests of the average Canadian. The only group served by this action would be our Bankers. While their portfolios would be enhanced - it would hold little upside for the rest of us.
As an editorial in this weekend's The Daily Observer noted the Tories are about to give Canada "a budget that will be a full course meal for the banks and industry, with the average taxpayers getting the table scraps." To save his own skin, Harpo is about "raid the piggy bank, mortgage our future then give it to the very people who have put us in this mess to begin with." Egad, what will it take to save Canadian's from this fate - a second coming?
Hell, if the repeal of Section 401.2 does indeed show up as the poison pill in Tuesday's Budget, we hope that Friggin' Flaherty shows up in the House with a halo and beard to match his new pair of sandals, because he is not only going to have to turn an awful lot of water into wine to get us to swallow it. He's also going to have to walk on the water to get us to believe it!!
[** n.b. Since reading the original ROB story on Tuesday last, I (Fat Arse) have made numerous calls to various organizations trying to ascertain their views on a 'poison pill'. Regrettably, it has been impossible to get a formal response from either the national NDP or LPC party offices in this regard. I did have a nice conversation with a NDP 'caucus office(?)' employee who took notes and promised to get back to me on Friday - but he never did. As for the LPC, on Wednesday morning I was directed to talk with Mr. Lauzon about the matter. Despite leaving numerous messages asking if either he, or his subordinate, could clarify the Liberal position on any poison pill in the Budget surrounding foreign ownership of Canada's Banks - my calls were not returned. However, I would like to thank the very professional and engaging media chap at the Canadian Bankers Association who took the time to answer my questions and helped direct me to the appropriate places on their website to research their public pronouncements since October - thanks Andrew.]
Coming posts?:
Monday: "How the CBA pressured Harpo to force Flaherty to suck on their Grand Narrative.";
Wednesday: "Friggin' Flaherty and The Making of a Fiscal Apocalypse."
Troubling topic in so much that its being contemplated and the relative silence of most everyone. Puzzled me how this news isn't well documented. Even friends of mine in the financial industry were unaware when I broached the subject a few weeks ago.
GLobe and Mail ran a story on jan 20. Was disconcerting to see answers about why this should happen. like a setup was in the works.
Needless to say, Canadian bank stocks are down huge, with many financial blogs recommending shorting the stocks in early December.
And that idiot Adler thinks everything is peachy and everyone who is worried should have their heads examined.
Good article by the way. More people need to understand why they all of a sudden own their neighbours mortgage.
One more thing, if you can, explain who is going to collect the mortgages for the feds ( banks you think )?
And if they will collect them, whats their take ?
@ Mr. Nobody,
The entire government purchasing of mortgages seems specious to me. I am sure the banks have included in the sale price a "bundling fee", a transfer fee, and to oversee the management of the 'new' paper I am sure that they are also charging an admin fee. Reason I say this is I do not believe Canada Mortgage and Housing has anywhere near the capacity to properly administer all the new paper they are being saddled with. Have sound reason to think we are in for some mortgage horror stories in the next few years.
Other part of this equation that troubles me is that nobody seems to be under any obligation to inform the homeowner when the STATE (i.e. his own government) becomes the de-facto holder of his mortgage. If it was me I would want to know - I would also want to know why "my paper" was bundled as opposed to that of my neighbour. What is the formula the Bank are using to determine which mortgages they sell to Ottawa - are they only saddling the government with the riskiest of the lot?
wow! Chilling. Good research, really good.
I really hope th reason you couldn't get a response from the Libs or NDP is a question of strategy on their part - timing, waiting to use a counter response as ammo to oppose the budget, and that they won't allow this.
I think you're right on this one. It's certainly more serious and long reaching than anything I thought of.
Jesus,
I hope your right re: Lib reason for not responding. In my messagers I made it absolutely crystal clear what my specific concern was - but I fear the Lib's especially have not considered this "poison pill' possibility.
Really hope they can craft a succinct and needed defense of our economic sovereignty should Harpo & co. put this 'pill' in the Budget. To have this pass would cripple our autonomy completely.
I'm confused. McCallum is the finance critic and he has been advocating for removal of the ownership restrictions for years. Does anyone know what Iggy's position is?
RBC Bank President Gordon Nixon - Salary $11.73 Million
$100,000 - MISTAKE (FISHERMEN'S LOAN)
I'm a commercial fisherman fighting the Royal Bank of Canada (RBC Bank) over a $100,000 loan mistake. I lost my home, fishing vessel and equipment. Help me fight this corporate bully by closing your RBC Bank account.
There was no monthly interest payment date or amount of interest payable per month on my loan agreement. Date of first installment payment (Principal + interest) is approximately 1 year from the signing of my contract.
Demand loan agreements signed by other fishermen around the same time disclosed monthly interest payment dates and interest amounts payable per month.The lending policy for fishermen did change at RBC from one payment (principal + interest) per year for fishing loans to principal paid yearly with interest paid monthly. This lending practice was in place when I approached RBC.
Only problem is the loans officer was a replacement who wasn't familiar with these type of loans. She never informed me verbally or in writing about this new criteria.
Phone or e-mail:
RBC President, Gordon Nixon, Toronto (416)974-6415
RBC Vice President, Sales, Anne Lockie, Toronto (416)974-6821
RBC President, Atlantic Provinces, Greg Grice (902)421-8112 mail to:greg.grice@rbc.com
RBC Manager, Cape Breton/Eastern Nova Scotia, Jerry Rankin (902)567-8600
RBC Vice President, Atlantic Provinces, Brian Conway (902)491-4302 mail to:brian.conway@rbc.com
RBC Vice President, Halifax Region, Tammy Holland (902)421-8112 mail to:tammy.holland@rbc.com
RBC Senior Manager, Media & Public Relations, Beja Rodeck (416)974-5506 mail to:beja.rodeck@rbc.com
RBC Ombudsman, Wendy Knight, Toronto, Ontario 1-800-769-2542 mail to:ombudsman@rbc.com
Ombudsman for Banking Services & Investments, JoAnne Olafson, Toronto, 1-888-451-4519 mail to:ombudsman@obsi.ca
http://www.pfraser.blogspot.com
http://www.corporatebully.ca
http://www.youtube.com/CORPORATEBULLY
http://www.p2pnet.net/story/17877
"Fighting the Royal Bank of Canada (RBC Bank) one customer at a time"
I too am hopeful the opposition is waiting to pounce.
Somehow I don't think so, this news has been out for enough time for somebody to scream bloody murder.
Perhaps FA, your post will generate some phone calls and emailing. Its the best we can do.
Sorry to hear about your predicament on the loan there buddy. Perhaps best to contact the leprechaun directly. Hopefully he remembers what it means to be common.
@ Anon,
I did try to get an official response on this from the LPC (many times). As for Tipsy John's take on the issue - yes I am aware of his stance. However, he is not only wrong on this point - he is not the leader of the party. While I respect McCallum's insight on many economic issues - Iggy is the one to set the policy. Let us pray he sets the right course!
The issue of foreign investment shouldn't be confused with the mortgage issue. Like allowing bank mergers, foreign investment commentary has gone on for some time.
This is going from worse to worse. We definitely can learn from the US experience.
http://www.huffingtonpost.com/2009/01/25/pelosi-open-to-more-feder_n_160653.html
unless they are hiding something from us, like our Banks aren't as secure as we think.
Hmm, will there be a poison pill? I wouldnt be so sure...
And is the coalition option dead? We're not sure how we feel about this.
It would be great to have seats at the cabinet table in a federal government, but on the other hand it might complicate things for us here in Manitoba...
Doer and his ministers (**cough **cough OSWALD) have strong working relationships with the Feds. Its a reality thats sad but true to win votes. Is it worth the risk of alienating the Manitoba voters we need to keep us in power?
Arse,
There are a lot of if's and suppositions in there. Let me bring things back down to earth for a sec:
>The government not necessarily looking at opening up the banking system to foreign government ownership.
>The rules do not prohibit ownership by private foreign banks.
>A foreign take-over of a vital Canadian business is subject to review and could be prevented, as was recently the case with that aerospace company.
>Canadian banks are now prohibited from buying interest with in many foreign banks in a deal that involves stock, meaning that their hands are being tied which prevents them from growing and taking advantage of opportunities that could be beneficial to shareholders.
>Even if the foreign ownership rules are relaxed they could be done so in a way to prevent foreign control of Canadian banks.
In other words, nothing here foretells the end of the world.
@Cherenkov,
Your points are taken. I may not agree - but they are taken. I know my post has some hyperbole (but then again isn't there always). Yet, as it was explained to me, if Canadian Banks want the right to buy into US Banks (via stock swaps) then they too must be open to the foreign government ownership ownership. Apparently this is a no-ands-ifs-or-buts criteria. Otherwise, the US government will not permit the deal with any bank now getting bail-out funds from the US Fed.
As for rule changes that would mitigate against undue foreign control over an institution - yes, possible. But, once our institutions get a taste of the cash infusion from sovereign funds from abroad... all bets are off. They will do all their thinking with their little short-term heads rather than with the long-term heads.
Further, I want no provision for any government anywhere to own our bank stocks - not even the Cdn gvt. Too many variables that can go awry.
The argument the CBA is making in favour of the section 401.2 rule change is predicated on their playing up the current credit-crunch (both myth and truth)- but that is another story....
Nothing new here. The Canadian Banking Industry is only interested in consolidating profit. Not in consolidating the country's economy.
And the waters have been muddied and it shall all be lost in the translation.
70 Billion taxpayers money transferred to banks. Yippeeeyihosed
Yes, it's never a good idea to do all your thinking with your little head. I did have a good time reading your post, FA, although the length of it almost scared me off.
@Cherenkov,
re: my lack of brevity - tis an affliction!
Hopefully you'll find new post less taxing?
@ Draft Oswald,
Looks to us like you are actually *very sure how you feel* about the coalition and cozying up to Harpo & co.
Where we come from, ambivalence and “regret” over sacrificing principles for political expediency aren’t quite the same thing really.
Still, we are glad to know that you are familiar (cough, cough) with the principles that you are trampling.