When is a bailout not a bailout?

jacee · May 1, 2012

Harper lies again ...

$114b to the banks so they could post profits of $27b.

"Liquidity program" = BAILOUT!

Despite all the fuss, there’s little argument that these government liquidity programs (or whatever you want to call them) prevented an abrupt and potentially severe housing downturn at the time. Macdonald told CBC’s Kevin O’Leary that he “absolutely agrees” that these initiatives saved the Canadian financial system. Maybe that’s an exaggeration, but they certainly prevented enormous economic pain when lending market’s seized up.

But of course it isn't any of our business ... <_<

http://www.advisor.ca/news/industry-news/were-canadas-banks-bailed-out-77734

Over the entire aid period, the banks reported $27 billion in total profits between them and the CEOs of each of the banks were among the highest paid Canadian CEOs. Between 2008 and 2009, each bank CEO received an average raise in total compensation of 19%. The extraordinary amount of support given to the banks was kept secret, and CCPA senior economist David Macdonald says,“The government claims it was offering ‘liquidity support’, but it looks like a bailout to me.”

Oh good, the bank CEO's were able to keep their whopping raises because we bailed them out. We'll just explain to the sick refugee kids that they can't have any medicine because the bankers needed their whopping raises and all the money went to them. I'm sure that'll make them feel better.

Edited May 1, 2012 by jacee

cybercoma · May 1, 2012

It was only a 19% raise on average, while people complain that labour and unions need to make concessions by giving up benefits, pensions, and reduce their wages. :rolleyes:

The only thing that gives me hope is that it's completely unsustainable. Labour and management need to be a balanced equation. If they keep taking from labour, there will be no customer base left and the economy will go belly up. Then people like Kevin O'Leary will scratch that fat bald heads wondering what the hell happened and inevitably blame labour in some way.

Edited May 1, 2012 by cybercoma

Topaz · May 1, 2012

I wonder how the media missed this when it was happening? I understand why the Tories did it but, why the big lie or even omitting they did it and then to go out there in world and boost about our banking, what the world must be thinking. I've posted this article before on this topic but maybe reading it again it will become cleared when Harper did this, although the latest view says 144 billion , the following article has it at 75Billion. http://www.globalresearch.ca/index.php?context=va&aid=12007

May 1, 2012

Despite all the fuss, there’s little argument that these government liquidity programs (or whatever you want to call them) prevented an abrupt and potentially severe housing downturn at the time. Macdonald told CBC’s Kevin O’Leary that he “absolutely agrees” that these initiatives saved the Canadian financial system.

They didn't need to "save" anything. As I recall Joe Flatularity let it slip, that the problems in the US did not affect banks in Canada, that our banks were in great shape. However he didn't say why, but those who pay attention knew it was because of years of fiscal restraint by Paul Martin, who asked Canadians to "tighten their belts" to pay down the deficit. We the taxpayer had to pay that sacrifice to put Canada in the lead financially. We payed the price, but we didn't get to reap the rewards.

Very next day the Harper government made the statement that there WAS a problem, and the government was going to have to make appropriate amends to save the economy. If you didn't smell shit at that moment you must have your head buried. Because fact is, Canadian banks were "envious" of the handouts being given their competitors after the same had been so fiscally irresponsible. Canadian banks wanted their handout too, despite the fact they never needed it.

Meanwhile CPC supporters couldn't shut their festering gobs in making excuses, explaining why this wasn't a bailout and why the government is doing the right thing. Lies. They are not interested in what's best for this country.

May 1, 2012

The only thing that gives me hope is that it's completely unsustainable. Labour and management need to be a balanced equation. If they keep taking from labour, there will be no customer base left and the economy will go belly up. Then people like Kevin O'Leary will scratch that fat bald heads wondering what the hell happened and inevitably blame labour in some way.

You have too much hope my friend. Too much hope, and faith. You read about the government will let employers pay foreign workers -15% compared to the average. Then the average becomes a downward sliding window. This is only the next step in what is clearly a class war.

The nouveau elite are not concerned about balancing the system. They don't have that kind of empathy. They depend on time and space to assuage the impact of their clutch-and-grab economic methods.

Globalization means markets can shift to other regions, for example where there is more than ten times the population of Canada. A hundred times the population, across regions of Asia and Indonesia. The goal is to sell everyone over there a cheap cell phone, computer and car. Just think of the money to be made...

What globalization really means is, globalization of the investments, globalization of profiteering. It means the ability to move money around, using time and space to avoid the fallout in one area, and continue accumulating "growth" in another region. When a region gets depleted, it's left to its own natural resources to recover, and over a time the people in a region will build their system back up again. Then the global profiteers will return, bring in their corporations, their Walmarts offering cheap goods. The goods made by other regions where the people have been brought economically to their knees. And round she goes.

It's a necessity.

capricorn · May 1, 2012

Harper lies again ...

$114b to the banks so they could post profits of $27b.

"Liquidity program" = BAILOUT!

It was called the Insured Mortgage Purchase Program.

Financial institutions in Canada hold a substantial number of residential mortgages on their balance sheets. These include a large volume of mortgages that are insured against default by the Canada Mortgage and Housing Corporation (CMHC) or by private sector firms backed by the guarantee of the Government of Canada. For mortgage lenders, these mortgages are of very high value because they represent virtually no risk to the quality of their balance sheets.
Under the IMPP, the government proposes to purchase these mortgages from financial institutions. More specifically, through CMHC, the government intends to buy National Housing Act Mortgage-Backed Securities (NHA MBS), a kind of bond for which the underlying asset is a pool of mortgage loans guaranteed by CMHC. In exchange, financial institutions will receive a cash payment that they may use to make new loans to consumers and businesses.

To put IMPP activities into perspective, consider that at the end of November 2008, the estimated value of outstanding residential mortgages in Canada was $900 billion. (2) Through the IMPP, the Canadian government proposes to purchase up to $125 billion worth of these mortgages, which would result in its holding nearly 15% of all outstanding mortgages in the country.

http://www.parl.gc.ca/Content/LOP/ResearchPublications/prb0856-e.htm#Overview

As a result, the federal government raked in plenty of cash through interest.

Where was the lie? And it certainly wasn't secret. When the program was initiated it received plenty of media coverage.

Michael Hardner · May 1, 2012

I wonder how the media missed this when it was happening? I understand why the Tories did it but, why the big lie or even omitting they did it and then to go out there in world and boost about our banking, what the world must be thinking. I've posted this article before on this topic but maybe reading it again it will become cleared when Harper did this, although the latest view says 144 billion , the following article has it at 75Billion. http://www.globalresearch.ca/index.php?context=va&aid=12007

Investigative journalism isn't what it was.

waldo · May 1, 2012

Where was the lie?

Stephen Harper: "The Banks of Canada are safe and secure and we have no reason to bail them out".

Keepitsimple · May 1, 2012

I wonder how the media missed this when it was happening?

The media did NOT miss it. CBC tried to jump all over it and it was in all the papers - it went nowhere because it made good sense. It's a three year old story. There was no bailout. The Government "bought" some mortgages from the banks so that the banks could then continue to give credit to both small and large businesses during the recessions. And the government received interest on the mortgages that it bought. When things settled dow, the Government "sold" the mortgages back to the banks. It's pretty simple....and it made a lot of sense. Very smart.

Why this Left-wing "think" tank even published this report at this time - after almost 3 years - is puzzling at best.

Edited May 1, 2012 by Keepitsimple

waldo · May 1, 2012

Where was the lie?

Stephen Harper: "We have, I think, the only banks in the western world where we’re not looking at bailouts or anything like that"

waldo · May 1, 2012

Great Canadian Bank Bailout: What The Big 5 Banks Got:

- TD Bank: $26 Billion

- Scotiabank: $25 Billion

- RBC: $25 Billion

- CIBC: $21 Billion

- BMO: $17 Billion

Smallc · May 1, 2012

Poor, clueless, MLW member Waldo.

waldo · May 1, 2012

Poor, clueless, MLW member Waldo.

buddy, don't take your failed love-life out on MLW member waldo! :lol:

Those who say this wasn’t a bailout argue Canadian banks had a “liquidity” problem, not a “solvency” problem like the U.S. banks. What this means is that Canadian banks had the collateral needed to get loans to pay their bills, something the U.S. banks didn’t have.
But if the problem was that no one wanted to lend to Canadian banks, as the banks themselves say, then they would have had to sell assets to pay their bills, and pretty soon the banks’ “liquidity” problem would have become a “solvency” problem, just like the U.S. banks.

Without the bailout, the Canadian banks wouldn’t have been able to pay their bills. It’s as simple as that.

Edited May 1, 2012 by waldo

Smallc · May 1, 2012

pfft, yeah, every financial expert in the world is wrong about our banking system.

TimG · May 1, 2012

Where was the lie? And it certainly wasn't secret. When the program was initiated it received plenty of media coverage.

The problem is the lefties on this forum are angry that the government couldn't use the program as a way to bully more concessions out of the bank.

Of course they missed the most important fact: the banks did not need the program. The government only offered it because if they did not then the banks would not be able to lend more money to small businesses that needed the credit.

mentalfloss · May 1, 2012

Shouldn't righties be the ones pissed about bailouts?

Smallc · May 1, 2012

Shouldn't righties be the ones pissed about bailouts?

Sure....so where's the bailout?

The_Squid · May 1, 2012

Sure....so where's the bailout?

Taxpayer money going to private business to shore up liquidity is a "bailout".

Not calling it a bailout is purely semantics.

But what has become clear -- and what neither side can really dispute -- is that the fantastical notion of Canada’s banks being immune to global problems is little more than an illusion. And it’s a notion that -- for the sake of our own well-being -- needs to be shattered.
Why? Because of the dangers of over-confidence.

http://www.huffingtonpost.ca/2012/04/30/canada-bank-bailout_n_1466219.html?ref=canada-business

Smallc · May 1, 2012

Taxpayer money going to private business to shore up liquidity is a "bailout".

No, actually, it isn't, and wasn't. The global credit market was pretty much frozen. What the Government of Canada did simply ensured that didn't happen here. There were no banks in danger of failing, but rather, there was a danger of increased damage to the economy.

TimG · May 1, 2012

Taxpayer money going to private business to shore up liquidity is a "bailout".

Only if the money provided benefit to the business receiving the funds. In this case, the banks were fine and did not need the money. The trouble is the economy would suffer because the banks needed to preserve capital so they would have cut back on lending at a time when many businesses needed to borrow money. The deal simply moved loans off of the banks books until things stabilized. Edited May 1, 2012 by TimG

cybercoma · May 1, 2012

What the Government of Canada did simply ensured that didn't happen here.

And how did they do that?

By bailing out the banks.

So, the government gave banks our money, so the banks can lend it back to us with interest. Meanwhile, the executives raked in huge bonuses.

Smallc · May 1, 2012

And how did they do that?

By bailing out the banks.

No, it isn't even close to the same thing. They performed a business transaction to ensure the continuation of liquid credit. The banks would have been fine. Some of the rest of us wouldn't. This wasn't about helping banks.

cybercoma · May 1, 2012

They performed a business transaction to ensure the continuation of liquid credit.

A business transaction that saw billions of taxpayers' dollars go to the banks when they didn't need it.

GostHacked · May 1, 2012

No, actually, it isn't, and wasn't. The global credit market was pretty much frozen. What the Government of Canada did simply ensured that didn't happen here. There were no banks in danger of failing, but rather, there was a danger of increased damage to the economy.

It's a bailout.

Smallc · May 1, 2012

A business transaction that saw billions of taxpayers' dollars go to the banks when they didn't need it.

They didn't need it, you're right. We needed it. Banks borrow money from each other. That money flow freely across international boundaries. That money stopped flowing in 2008. The international credit markets started to lock up. The Government of Canada and the banks made a move to ensure that within Canada credit continued to flow, and we're all the better because of it. Trying to spin this into some kind of evil bailout after the fact is dishonest.