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Email this9:58 am
April 6, 2013
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Briguy said
…Interestingly enough, I think I read at GIC Wealth Management you can make a case for saying CDIC and DICO are two best FI guarantors in Canada since they are the only 2 guaranteed by a government. Not sure if that's an accurate statement or not, we've had many a discussion here about that.
Lots of us here would be very interested in seeing those supposed guarantees. But, unless GIC Wealth can provide the statements of guarantees by the governments, I would dismiss their case as uninformed musing.
I've searched for them and have not found any statement from the Government of Canada or Province of Ontario that says they guarantee the liabilities of CDIC or DICO. The statements would look something like this from TD Bank for savings accounts issued by two of its mortgage corporations:
… Savings Accounts offered by TD Mortgage Corporation, except in British Columbia or Yukon, which are offered by TD Pacific Mortgage Corporation. All Savings Accounts are guaranteed by The Toronto-Dominion Bank. …
My experience with brokers (insurance and deposit) is that they are not competent outside of the details of the products. I forget how many times I've been told directly by agents and read in articles by agents that life insurance policies are creditor proof. That's simply false.
I've found cases where a creditor of the deceased has successfully held up the payout of a life insurance policy in court for months and finally obtain a share of the proceeds to satisfy the debt.
10:51 am
March 17, 2018
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I've found cases where a creditor of the deceased has successfully held up the payout of a life insurance policy in court for months and finally obtain a share of the proceeds to satisfy the debt. /em>
@Norman1 I thought if your life insurance policy has a designated beneficiary ( ie. not just payable to estate ) , then it is creditor proof. Source:
https://www.moneysense.ca/save/financial-planning/estate-planning-investment-beneficiaries/
11:50 am
August 4, 2010
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Norman1 said
Lots of us here would be very interested in seeing those supposed guarantees. But, unless GIC Wealth can provide the statements of guarantees by the governments, I would dismiss their case as uninformed musing.
I've searched for them and have not found any statement from the Government of Canada or Province of Ontario that says they guarantee the liabilities of CDIC or DICO.
I think it is fairly clear that CDIC is guaranteed by the Government of Canada. It is an "Agent of the Crown" as per section 3(2) of the CDIC Act, and by definition:
The Crown is ultimately fully liable and financially exposed for all actions and decisions by its agent corporation while the corporation is operating within its mandate. In other words, the corporation's assets and liabilities are the assets and liabilities of the government.
For Ontario, as best as I could determine many years ago, they are not the equivalent of an agent of the the Ontario crown, and the best response I could get was from the Ontario auditor-general, which said they regarded it as a "Trust", a status that generally means the government is not ultimately responsible for its debts. I don't know if anything has changed in the recent DICO reorganization.
As far as I know, none of the provincial governments explicitly guarantee their deposit corps (as opposed to what they might or might not actually do in practice in a catastrophe). The wording in Alberta says something about ensuring the obligations will be carried out, which might be a stronger case for government liability.
7:28 pm
September 11, 2013
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CDIC is a Crown corporation, that's true. But is the fact that the federal government is liable and exposed for the agent crown corporation's actions and decisions, and that they share the assets and liabilities, the same as saying the federal government will top up CDIC if it runs out of money? I don't see that explicitly stated in the legislation, which you'd think they'd want to make clear if it was the case, but I think we all know politically it would be pretty much impossible for a federal gov't to say it has CDIC's liability but it won't or can't pay it off.
8:13 pm
October 21, 2013
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I have no idea, and agree the wording is not clear, but wonder if the govt of the day would just add it to the national debt making no guarantee as to when it would be paid out.
In the case of CDIC, the govt can always print more money to pay it off. If CDIC runs out of money, our dollar isn't going to be worth much, no matter how you slice it.
Best to spread your money around, a strategy which is encouraged by the relatively low insured limits.
Also, I like the smaller FIs, which could be the canaries in the coal mine, allowing time to possibly pursue a new strategy.
That said, by no means do I think the big banks are immune from failure. They take bigger risks. Perhaps they can afford them; perhaps not. One of the credit unions where we have a good chunk of money has significantly stricter lending criteria for mortgages than the big banks do. I know they had only one loan default last year but don't know the total number of loas.
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