A Call For Higher CDIC Limits ! | Page 4 | General financial discussion | Discussion forum

Norman1 said

agit said

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
…
 

That provides no support to what you are saying. Just citing items from the Internet that have matching words doesn't mean anything. As well, some of us actually read the stuff we cite.

There's no bailout when a bank provides liquidity support to a business through a line of credit so that the business can pay its employees every two weeks and its utility bills monthly before it is paid by its clients up to 60 days after it delivers its services or goods.

Similarly, there's no bailout when a bank provides liquidity support through a bridge mortgage to someone who is changing houses but the closing date on the purchase of the new house is one month before the closing date of the sale of their current house.

You don't seem to understand the difference between "bailout" and "liquidity support".  

You would never ever get “a bridging loan” for more than the house is worth. Canadian banks got more “liquidity” than their cap worth.

And the specific problem in 2008 was mortgage securities. They were in big trouble. Taken off big banks by CMHC in exchange for far more “liquidity” than their price at the time with no obligation to pay anything back ever. Wasn’t a loan at all. Its exactly as bailout is defined in the dictionary.

The auto industry is far more honest. They also got “liquidity”. It also paid off eventually. Nobody is coy about the word “bailout”. Because thats what it was.

will also argue if the CMHC did not take on the mortgages (that they already insured 100%) at all, the banks will simply STOP credit and liquidity flow to all individuals and businesses to conserve cash, and banks will survive without any help. Imagine what will happen ? Its glad policy and decision makers at the time did not share the extreme tunnel vision of some.

Yes, “they already insured” these mortgages 100% as part of the bailout. Survival under scenario of obligations outweighing assets is a big question mark. SVB could have been saved if the Feds “insured” bonds to the tune of face value and then swapped for cash.

You are building a straw man again. Bailing out the banks was right. Nobody said it wasn’t.

The issue in Canada is that we are paying twice. We limit competition by creating bank oligopoly, as a result we are overpaying for poorer services than elsewhere. The whole economy is skewed. And the argument is “well it’s justified because our banks are the safest”. In practice the taxpayer is still on the hook for big banks. You don’t seem to be denying it. Therefore to have a more even playing field and a bit more competition, it would benefit everyone (except those lobbying for oligopoly) to raise CDIC threshold.

My background is that I don’t work for the financial industry. I do invest in banks and I use their services (also in Britain and US). That's the extent of my CofI. Your turn.

Not going to happen.

The lower rated CDIC members are paying 0.15%, 0.30%, and 0.3333% of insured deposits as CDIC premiums.

As well, CDIC is a member of International Association of Deposit Insurers. The association's position has been to fully cover most of the depositors while not fully covering most of the deposits.

Doug said

None have AAA rated deposits or bonds, to my knowledge. (Assuming you mean Canadian banks.)

Cheers,
Doug  

I was unable to get a list of constituents of the S&P/BMV Corporate AAA Rated Bond Index. Damn S&P Global. 🙁

Anyway, I went to Scotia iTRADE, and did a fixed income search for Canadian corporate bonds. No other limiters besides 'corporates' and rating was 'AAA'. It returned Laurentian Bank of Canada as the sole AAA rated corporate bond issue in Canada. How is that possible? That's got to be a data quality issue.

Cheers,
Doug

Doug said

I was unable to get a list of constituents of the S&P/BMV Corporate AAA Rated Bond Index. Damn S&P Global. 🙁

…

Don't think we want that index.

BMV = Bolsa Mexicana de Valores = Mexican Stock Exchange

Its page says the following about that bond index:

The S&P/BMV Corporate Fixed Coupon AAA Rated Bond Index is designed to measure the performance of investment-grade fixed-rate Mexican corporate bonds that have a credit rating of ‘AAA’ with maturities greater than 1 month and denominated in Mexican pesos.

Hold on there, mordko!

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.

I said the Canadian BANKING SYSTEM was considered one of the safest in the world. You turned that into safety of BANKS.

Not the same.

And at any rate, no deposits were lost in Credit Suisse this month, and that country's banking system isn't imperiled.
RetirEd

mordko said

Your turn.  

https://myhealth.alberta.ca/Health/Pages/conditions.aspx?hwid=uz2255

This is still on the bubble here in Canada, too. DuckDuckGo still found talk of support for the idea when I searched "increasing CDIC limit canada" in the last month. I didn't see anything in the federal budget reports, but there are numerous mentions of watching Christia Freeland for signals in a week or two.
RetirEd

"provide expanded authorities to increase deposit insurance and related measures in the even (sic) of a market disruption."

I read that too but thought it just gave CDIC the expanded authority to do so IF needed to during market disruption. In other words not a change in the current limit going forward.