Flaherty pressures banks to lend

[trent]

The Canadian Finance Minister Jim Flaherty tried to pressure Canadian banks to lend to both businesses and consumers last month and will hold meetings with the CEOs of big Canadian banks this month to discuss credit availability.

Does this sound familiar to you? Wasn't that what happened down in the US a few years ago when the Congress pressured US banks to extend credit to borrowers with poor credit in attempt to put everybody in a home even if they would never be able to pay for it?

One thing that politicians do not understand is that Canadian consumers are up to their eyeballs in debt, and they cannot take on more debt.

[Canadian]

Originally Posted by trent

The Canadian Finance Minister Jim Flaherty tried to pressure Canadian banks to lend to both businesses and consumers last month and will hold meetings with the CEOs of big Canadian banks this month to discuss credit availability.

Does this sound familiar to you? Wasn't that what happened down in the US a few years ago when the Congress pressured US banks to extend credit to borrowers with poor credit in attempt to put everybody in a home even if they would never be able to pay for it?

One thing that politicians do not understand is that Canadian consumers are up to their eyeballs in debt, and they cannot take on more debt.

I don't think that all Canadians are tapped-out as far as credit is concerned, and many people with savings will be able to afford buying a house at reduced prices very soon.

[Steven]

I hope that we don't have US style banking crisis, and that our Canadian banks continue to lend prudently to credit-worthy borrowers.

[sunshine]

Politicians may urge the banks to lend but it is a different story if the banks will do it. I don't see how this will solve the problem. We will have to go through foreclosures and bankruptcies and when all this easy credit is cleaned up (in a couple of years) everything will come back to place.

[bullish]

I don't think will have many foreclosures here in Canada. The lending standards of Canadian banks were stricter compared to US banks, and we almost don't have subprime mortgages.

[trent]

Originally Posted by bullish

I don't think will have many foreclosures here in Canada. The lending standards of Canadian banks were stricter compared to US banks, and we almost don't have subprime mortgages.

How is giving mortgages with 40 years with less than 5% down a strict lending? You have proved once again that you are a moron.

The idea that the subprime segment of the real estate market is solely responsible for the current real estate crash in US and Canada is simply flawed. The real problem is excessive leverage and credit, and even a borrower with pristine credit can borrow too much and go in foreclosure/bankruptcy because they are unable to service the excessive debt.

[chinoy99]

Originally Posted by bullish

I don't think will have many foreclosures here in Canada. The lending standards of Canadian banks were stricter compared to US banks, and we almost don't have subprime mortgages.

Bullish well said and correctly put. During the global economic recession, Canada's banks have remained well-capitalized, well-managed and well-regulated, not to mention highly profitable, and it is this profitability that leads to banking stability and contributes significantly to the retirement savings of the overwhelming majority of Canadians.

For two years in a row, the World Economic Forum has ranked Canada's banking system the strongest and most stable in the world. This is a home-grown success story that all Canadians should be proud of.

Also the Canadian taxpayers have not had to bail out Canadian banks and have not had to set up public entities to buy toxic assets. Governments in many other countries have.