A Call For Higher CDIC Limits ! | Page 3 | General financial discussion | Discussion forum

savemoresaveoften said

Indeed. Labeling ‘bail out’ attracts attention and suits the general public who hates bank just for the sake of hating banks. And when CCPA says so, it must be real too….  

Black & White labelling is very easy, makes for better headlines and encourages polarization.

Grey Scale thinking is much more difficult but encourages thoughtful, intelligent and friendly dialogue/discussion.

Bill said
As soon as I saw the CBC link, and then on top the CCPA reference at the beginning, time to stop reading as I could complete the article without reading it. Very important to be aware of biases of sources, on any part of the spectrum.

Big difference between bailout and providing liquidity, the latter is done regularly to keep things moving during crises, as we've seen regularly over recent years.

Lesson I learned as a young person was in my lifetime Canada's big banks aren't going to be allowed to go anywhere, for various reasons, so load up on their shares. Was a good move, not sure I would advise today's young the same though as they seem to want to change everything up these days.  

+1

With all the expansion down south in the last 10-15 years as a way to grow for the Canadian banks, they are not as solid as they used to be.
Back in the late early 90s when I started working, Cad banks were the most boring stocks to own and stock prices went nowhere. That was the golden time to load up.

But they are still the safest banks to own globally esp for dividend income purpose, just don’t expect the same returns we had seen.

Gents, you argument isn’t with me. Its with the dictionary.

“ A bailout is when a business, an individual, or a government provides money and/or resources (also known as a capital injection) to a failing company. These actions help to prevent the consequences of that business's potential downfall which may include bankruptcy and default on its financial obligations.

Businesses and governments may receive a bailout which may take the form of a loan, the purchasing of bonds, stocks or cash infusions, and may require the recused party to reimburse the support, depending upon the terms.”

https://www.investopedia.com/terms/b/bailout.asp

And this is exactly what happened. Now… When someone is raving about the messenger, “left”, “right”, and predicts a crash on a specific date, that’s fine. My problem is when the banks themselves and their employees are arguing with the dictionary. That makes me worry about transparency, honesty and trustworthiness.

mordko said
Businesses and governments may receive a bailout which may take the form of a loan, the purchasing of bonds, stocks or cash infusions, and may require the recused party to reimburse the support, depending upon the terms.”

Except none of those took place with BMO, CIBC nor BNS at the time.

Also there is the definition that the business must be in a pending collapse state, and none of us knew in reality if those 3 mentioned names were or not.

Most will also forgot or never realized that even some of the strongest US banks at the time WERE FORCED to borrow more CASH from the Fed to bolster their capital, whether the banks asked for it or not. So we now said the Fed bailed those banks out too ??

And going back to the definition of bailout, all of the following took place, except “stocks”.

“ may take the form of a loan, the purchasing of bonds, stocks or cash infusions”.

agit said

2008-2009 CMHC allowed Canadian banks to transfer the risk on over $90 billion of previously uninsured mortgages from their balance sheets on to Canadian taxpayers 

Quoting a Maclean's article the cites that same Canadian Centre for Policy Alternatives garbage proves nothing.

An insured mortgage is an insured mortgage. Doesn't matter if the mortgage wasn't insured originally because the down payment was more than 20%.

CMHC didn't allow anything. Anyone can pay the mortgage insurance premium later, while the mortgage and borrower still qualifies, to insure the mortgage.

People pay for unnecessary mortgage insurance all the time. With 35% down, the insurance premium is a one-time 0.6% fee. Insuring the mortgage can reduce the rate by 20 to 30 bps per year. That's 33%+ per annum return on the insurance premium!

The Insured Mortgage Purchase Program was not fully utilized and eventually fizzled out. That's because, once regular market conditions returned, the banks could resume selling insured mortgages to investors at a premium instead of selling them to the government program at a discount.

As I said before, don't believe the CCPA lies.

mordko said
Yes, its all the market conditions fault. Mortgage securities were unfairly priced. Transferring risk to taxpayer and getting their cash should be free. Lehman, Credit Suisse and SVB executives agree with their counterparts at Canadian big banks.  

Your position on this is clear and nothing will change your mind.
At the same time, some CCPA claims and misrepresentation won’t change mine and a few others either. Does not mean we are right, definitely don’t mean what u believe and said was true either.

Both sides will continue to believe what each think is correct, even tho it’s at polar extreme.

Yes, the Canadian banking system is considered one of the safest in the world. And the Titanic was just about the safest ship in the world.

So, are you going to let go of the wheel in an autopiloting Tesla?

Thought not. Those curves have long tails, thin as they be.
ReirEd

RetirEd said
Yes, the Canadian banking system is considered one of the safest in the world.   

Indeed this statement is often repeated by said banks, our government and their regulators. Funny thing: Swiss banks and government used to make the same claim. “Best in the world”. They were SO proud.

On a somewhat more objective measure the likes of CIBC are ranked as AA- by Fitch which isn’t too bad but there are AAA ranked banks outside Canada.

Norman1 said

agit said

Quoting a Maclean's article the cites that same Canadian Centre for Policy Alternatives garbage proves nothing.

As I said before, don't believe the CCPA lies.  

Yes the Gov of Canada "bailout' or "liquidity support" or "liquidity programs"

Bank of Canada Introduces Further Measure to Provide Liquidity to the Canadian Financial System

link to BOC notice Wednesday, November 12, 2008, 08:00 (ET) and Tuesday, October 14, 2008, 09:00 (ET)

https://www.bankofcanada.ca/2008/11/bank-canada-introduces-further-measure-provide-liquidity/

https://www.bankofcanada.ca/2008/10/part-g7-action-plan-bank-canada-introduces-new-measures-provide-liquidity/

BOC rule
Provision of liquidity to the financial system
The Bank of Canada is the ultimate source of liquid funds to the financial system, and serves as the system’s “lender of last resort.”