Poll: Do you agree with the New York Times' opinion on Canadian Banks?

[Contrarian]

This is trending and decided to make a thread about it. 

⬆️ Why Canada’s Banks Remain ‘Stable and Resilient’

The country’s financial stability, and the high profitability of its banks at a time when those in the U.S. are in turmoil, comes from strong regulations.

https://www.nytimes.com/2023/03/18/world/canada/why-canadas-banks-remain-stable-and-resilient.html


 

• Do you agree with the New York Times' opinion on Canadian Banks?

Edited March 18 by Contrarian
edit design

[Michael Hardner]

23 minutes ago, Contrarian said:

This is trending and decided to make a thread about it. 

⬆️ Why Canada’s Banks Remain ‘Stable and Resilient’

The country’s financial stability, and the high profitability of its banks at a time when those in the U.S. are in turmoil, comes from strong regulations.

https://www.nytimes.com/2023/03/18/world/canada/why-canadas-banks-remain-stable-and-resilient.html


 

• Do you agree with the New York Times' opinion on Canadian Banks?

If course.

If you want excitement and stupid risks move to the US.

It's a great place to visit too, don't forget to buy travel insurance and a bullet proof vest.

[I am Groot]

Canadian bank profits come from a lack of real competition as they are an oligopoly protected by the government, which guarantees them higher profit margins than foreign companies. Same-same for the telcoms.

[Queenmandy85]

26 minutes ago, I am Groot said:

Canadian bank profits come from a lack of real competition as they are an oligopoly protected by the government, which guarantees them higher profit margins than foreign companies. Same-same for the telcoms.

That is the best arguement for buying stock in a Canadian Bank. I do not understand why people whine and complain that a bank is making high profits, but don't by stock to take advantage of the high returns. 

The banks deserve high profits because they keep your money safe. When you go to a Canadian bank to make a withdrawl, you can have faith that your money will be there. When you own stock in a Canadian Bank, you can expect a good return on your investment. That is why your pension plan has bank stock in its portfolio. Large profits are a wonderful thing. 

Edited March 18 by Queenmandy85

[I am Groot]

8 minutes ago, Queenmandy85 said:

That is the best arguement for buying stock in a Canadian Bank. I do not understand why people whine and complain that a bank is making high profits, but don't by stock to take advantage of the high returns. 

The banks deserve high profits because they keep your money safe. When you go to a Canadian bank to make a withdrawl, you can have faith that your money will be there. When you own stock in a Canadian Bank, you can expect a good return on your investment. That is why your pension plan has bank stock in its portfolio. Large profits are a wonderful thing. 

Most Canadians are afraid of the stock market and know and understand little or nothing about it. If they own stocks it's usually through mutual funds, which are a ripoff in most cases. And the stock value of Canadian banks, overall, is down about 20% in the last year. 

American bank deposits are protected up to US$250k, no matter what happens to the bank. Canadian bank deposits are protected to CAN$100k. Americans pay lower fees at their banks for just about everything, including investments, and pay lower fees for both mutual funds and ETFs. 

[Queenmandy85]

58 minutes ago, I am Groot said:

Most Canadians are afraid of the stock market and know and understand little or nothing about it. If they own stocks it's usually through mutual funds, which are a ripoff in most cases. And the stock value of Canadian banks, overall, is down about 20% in the last year. 

 

The drop is likely due to Covid. Over a 25 year period, you stock in the Canadian banks is going to pay off very well. If a Canadian Bank were to ever fail, no investment is safe. I agree, mutual funds are a poor investment. Banks pay very good dividends. If you start buying bank stock in your early twenties, and and invest every month, you will retire comfortably. If you have over $100,000 in a single account, you are not earning anything. unless it was in a GIC purchased in Feb, 2023. Never leave that money sitting in an account doing nothing.

Donald Smith came to Canada at the age of 20, as a clerk in the Hudsons Bay company. He ended up a major stockholder in the Bank of Montreal, and controlling interest in the CPR. He became Lord Strathcona. 

[Dougie93]

I would agree that Canadian banks will be bailed out by the Crown, come what may

Canada has never had a bank failure, not even in the Great Depression

because Canada cannot allow its banks to fail, since there are so few banks in Canada

when the Canadian banks fall, that will be the fall of Canada itself

[Moonbox]

1 hour ago, I am Groot said:

Most Canadians are afraid of the stock market and know and understand little or nothing about it.

It's the same in the US.  

1 hour ago, I am Groot said:

If they own stocks it's usually through mutual funds, which are a ripoff in most cases.

Also the same in the US, and though most mutual funds are mediocre (and especially in Canada more expensive than they need to be), calling them a straight rip-off is not entirely fair.  

1 hour ago, I am Groot said:

American bank deposits are protected up to US$250k, no matter what happens to the bank. Canadian bank deposits are protected to CAN$100k. Americans pay lower fees at their banks for just about everything, including investments, and pay lower fees for both mutual funds and ETFs. 

Here's a more important point to make.  Canadian banks are safer and more resilient because of regulation, but also protected from competition by that same regulation and consumers suffer as a result.  I think the Canadian system has proven superior over the last 20 years overall, but we definitely have our own problems.  

[Dougie93]

21 minutes ago, Queenmandy85 said:

Donald Smith came to Canada at the age of 20, as a clerk in the Hudsons Bay company. He ended up a major stockholder in the Bank of Montreal, and controlling interest in the CPR. He became Lord Strathcona. 

ah, my cousin in the end, a good ol' Canadian Smitty if there ever was one

after he commissioned the Lord Starthcona's Horse to fight the Boer

one of his officers, Captain Andrew Hamilton Gault

then of the Black Watch ( Royal Highland Regiment ) of Canada in Montreal

founded Princess Patricia's Canadian Light Infantry

inspired by Lord Starthcona to donate the cost of equipping this new regiment

of Canadian veterans called back to duty, one thousand of them in just ten days

to fight on the Western Front of the Great War, for God, King & Country

by order of the Viceroy, Prince Arthur, Duke of Connaught & Stathaern

third son of Victoria Hanover, Mother Canada

under colours called the Ric-A-Dam-Doo meaning "Flag of our Mother"

in name of Princess Patricia of Connaught who wove the colours herself

Granddaughter of Mother Canada

VP

Edited March 18 by Dougie93

[Dougie93]

1 hour ago, Queenmandy85 said:

 If you start buying bank stock in your early twenties, and and invest every month, you will retire comfortably.

what if you are in a secular bear market ? 

from 1968 to 1982 the stock markets fell by 75%

the Japanese have been in a secular bear market since 29 December 1989

hence, if you had invested in the Japanese market in 1989

you have seen no net return in 34 years

you can't retire until you cash out, liquidate your stocks

but if you are in a generational secular bear market, you could have suffered 75% losses upon retirement age

Edited March 18 by Dougie93

[Queenmandy85]

If you buy shares regularly in the Royal Bank, and BMO, and reinvest the dividends in more bank stock,  starting when you are 25, by the time you are 60, you will be able to live off the dividends without selling the shares.

[Dougie93]

17 minutes ago, Queenmandy85 said:

If you buy shares regularly in the Royal Bank, and BMO, and reinvest the dividends in more bank stock,  starting when you are 25, by the time you are 60, you will be able to live off the dividends without selling the shares.

depends on how much you can afford to invest

inflation adjusted, you're not going to be able to retire on the returns the average Canadian can afford to invest

again, investing in the stock market for 35 years is no guarantee of anything

lots of Boomers were completely wiped out just as they were going to retire, thinking like that

the dividend yield of the Royal Bank is 4%

inflation is 7%, officially at least

so actually that is a 3% loss per year, inflation adjusted

in order for you to make a net 4% return, Royal Bank would have to be paying an 11% dividend

Edited March 18 by Dougie93

[Queenmandy85]

That is why I specified bank stock. When the NDP whines about banks making obscene profits, you are looking at an investment opportunity. Banks don't lose money. 

The time to start accumulating is when you are young, when you are unencumbered by marital partners and children. You can avoid tobacco and beverage alcohol, and, if you live in a city with public transit, you will save several thousand dollars a year without a car.

[Dougie93]

29 minutes ago, Queenmandy85 said:

 You can avoid tobacco and beverage alcohol, and, if you live in a city with public transit, you will save several thousand dollars a year without a car.

no drinking nor smoking ?

can't even own a sports car ?

f*ck that, sir

Edited March 18 by Dougie93

[I am Groot]

1 hour ago, Queenmandy85 said:

If you buy shares regularly in the Royal Bank, and BMO, and reinvest the dividends in more bank stock,  starting when you are 25, by the time you are 60, you will be able to live off the dividends without selling the shares.

Unfortunately, most don't have the money to do that when young. And often not even when middle-aged. I wasn't able to start investing in anything but food and rent until my forties.

[I am Groot]

1 hour ago, Dougie93 said:

depends on how much you can afford to invest

inflation adjusted, you're not going to be able to retire on the returns the average Canadian can afford to invest

again, investing in the stock market for 35 years is no guarantee of anything

lots of Boomers were completely wiped out just as they were going to retire, thinking like that

the dividend yield of the Royal Bank is 4%

inflation is 7%, officially at least

so actually that is a 3% loss per year, inflation adjusted

ZWB covered call bank ETF 7.64% yield. And in almost every year there'll also be an increase in the value of the ETF. Not last year, though, but likely this year.

[Dougie93]

33 minutes ago, Queenmandy85 said:

 The time to start accumulating is when you are young, when you are unencumbered by marital partners and children.

the biggest cost there is going to be shelter

rent inflation is far in excess of mortgage inflation

and every girl desires a fully detached home

so any male of the species who desires wife & children

has to get the down payment on a house above anything else

they have to work overtime, six day weeks, two jobs

just to put together the minimum down payment on a condo never mind fully detached

Edited March 18 by Dougie93

[Dougie93]

1 minute ago, I am Groot said:

ZWB covered call bank ETF 7.64% yield.

I would assert that the CPI is nonsense and Inflation is actually far in excess of 7%

and you can't live in your stock portfolio

so I would prioritize buying property over rolling everything into financials as Queenmandy suggests

[CdnFox]

There's not only the direct protection of gov't regulation but also indirect. For example - banks are shielded by the CMHC from defaults on mortgages.  In most cases a bankruptcy sale or sudden crash won't hurt the banks anywhere nearly as much as it would in the states for example.

Side note - you'll often hear for some reason those on the left claim that the banking rules were brought in by the federal liberals and conservatives hate them.  I don't know why they say this. the banking act we have now was brought in under mulroney and strengthened by harper.

[Dougie93]

12 minutes ago, CdnFox said:

There's not only the direct protection of gov't regulation but also indirect. For example - banks are shielded by the CMHC from defaults on mortgages.  In most cases a bankruptcy sale or sudden crash won't hurt the banks anywhere nearly as much as it would in the states for example.

the main difference in Canada is that you can't walk away from your mortgage

in Canada, even if you default, you still owe the money, the bank will sue you for it

as opposed to in forty of fifty American states, where you can simply hand back the keys and walk away

so Canadians do not default at the same rate as Americans

in terms of the mortgage threats to banks, that is more about mortgage backed securities

which breaks all the mortgages up and turns them into rated investment tranches

[CdnFox]

Just now, Dougie93 said:

the main difference in Canada is that you can't walk away from your mortgage

in Canada, even if you default, you still owe the money, the bank will sue you for it

 

As usual you are entirely wrong.  I don't know where you got the idea.

In Canada the bank will seize the asset. It is ILLEGAL to both sieze the asset AND sue someone for the money. That's with eveyrthing - including cars. if they reposess your car they can slam your credit rating but they can't sue you for the money.

So no. what you said is absolutely false. They will take the home, they will sell the home, they will not sue you

[Dougie93]

14 minutes ago, CdnFox said:

As usual you are entirely wrong.  I don't know where you got the idea.

In Canada the bank will seize the asset. It is ILLEGAL to both sieze the asset AND sue someone for the money. That's with eveyrthing - including cars. if they reposess your car they can slam your credit rating but they can't sue you for the money.

So no. what you said is absolutely false. They will take the home, they will sell the home, they will not sue you

if you are underwater on your mortgage in Canada, you still owe whatever balance is not covered by the sale

Canada has "full recourse" mortgage legislation, which means the balance owing is unsecured debt

example, you buy a house for $800k

the market drops and you default

the bank sells the home, but only for $600k

you still owe the bank $200k

American states have "no recourse" mortgages

wherein regardless of the balance owing after sale, you can walk away, no unsecured debt

Edited March 19 by Dougie93

[CdnFox]

8 minutes ago, Dougie93 said:

if you are underwater on your mortgage in Canada, you still owe whatever balance is not covered by the sale

Nope. Don't know where you got that idea - but if the bank seizes your place and loses money selling your place you're off the hook completely.  it'll go on your credit rating but that's it.

You're just plain wrong

 

[Dougie93]

26 minutes ago, CdnFox said:

Nope. Don't know where you got that idea - but if the bank seizes your place and loses money selling your place you're off the hook completely.  it'll go on your credit rating but that's it.

You're just plain wrong

 

Can You Walk Away From a Mortgage in Canada?

In most provinces across Canada, “no recourse” mortgages don’t exist. Instead, “full recourse” legislation is in place that allows lenders to require borrowers to deal with their underwater mortgages rather than allowing them to walk away from them. As such, mortgage shortfalls end up becoming unsecured debt once the sale of the home is finalized. 

Borrowers will still owe the outstanding amount, whether it’s to the lender or the mortgage default insurance company. That said, homeowners may walk away from their home loans if they file a consumer proposal or bankruptcy. 

https://www.zoocasa.com/blog/can-you-walk-away-from-a-mortgage-in-canada/

in Canada, under "full recourse" legislation, you still owe the balance remaining

either you will have to work out a payment plan with the bank

or you will have to declare bankruptcy

while under the American "no recourse" mortgages, you simply hand in the keys and walk away

this leads to a much higher default rate in America

Canada put the "full recourse" legislation in place to force greater stability in the Canadian market

that being said, Canadian banks still got themselves into trouble and required a bailout in 2008

as they were heavily invested in American mortgage backed securities

Canadian banks are quite large by Americans standards

thus Canadian banks invest that capital widely in American markets

hence any American banking crisis is a Canadian banking crisis by extension

Edited March 19 by Dougie93

[CdnFox]

Sorry - that's only for the power of sale. It doesn't apply to judicial foreclosures.

You can't just sell your house and walk away from the debt, that's true. But if you don't pay the mortgage the bank forecloses and that's that - they don't get any more.

Foreclosure is the more common method in Canada. As i said - banks usually foreclose and you can't foreclose on something and still recognize the debt.

This is what happens when you try to educate yourself with google along.