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Email this3:03 pm
February 17, 2013
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Top It Up said
I'll use CIBC as an example. They use to be the # 1 bank of the majors, they are now # 5
Oh, and by the way - the JWs have now moved Armageddon to 2034.
I'm not too worried about the big 5 (6). HSBC seemed to be able to absorb ludicrous large fines with barely any repercussions. I don't use the big 5... they just can't give me the interest.
Good news about Armageddon... I'll set up my RIF's so they're down to nothing by '35. LIVIN LARGE!! 
8:24 pm
October 21, 2013
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AltaRed said
I believe the CU system has more risk given the preponderance for regional or local loans than does a national bank. Remember what happened in the US Savings and Loan crisis? The US banks like Wachovia primarily into mortgage lending in the latest financial crisis? The Canadian trust companies that went teats up during the '80s and '90s housing crises?
I don't see that there is any comparison between current Cdn financial institutions and the US banks in 2008. They had almost no controls over mortgage lending, and were handing them out like candy to people who could never afford to maintain them.
Yes, there were a number of failures here in the 1980s. However, the CDIC covered the losses, all was well, and after that they tightened up our banking system so it was less likely to happen again - and so far it hasn't as far as I recall. There is a reason that we didn't experience the failures that the US experienced in 2008.
The inordinate size of our biggest banks pushes them to invest in riskier undertakings outside the country, and there are going to be big losses periodically.
4:20 am
December 17, 2016
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Loonie said
I don't see that there is any comparison between current Cdn financial institutions and the US banks in 2008. They had almost no controls over mortgage lending, and were handing them out like candy to people who could never afford to maintain them.
Well, the Canadian banks have had a pretty easy ride when it comes to home mortgage risk - they've been simply able to off-load the risk of underwriting mortgages onto taxpayers by selling those mortgages to CMHC. Banks can certainly have a different view of risk when there is no risk - no wonder they can post those heady profits - all the glory without the pain.
Hopefully the current government will address this issue and end the off-loading to CMHC.
4:48 am
October 21, 2013
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Top It Up said
Loonie said
I don't see that there is any comparison between current Cdn financial institutions and the US banks in 2008. They had almost no controls over mortgage lending, and were handing them out like candy to people who could never afford to maintain them.
Well, the Canadian banks have had a pretty easy ride when it comes to home mortgage risk - they've been simply able to off-load the risk of underwriting mortgages onto taxpayers by selling those mortgages to CMHC. Banks can certainly have a different view of risk when there is no risk - all the glory without the pain.
Hopefully the current government will address this issue and end the off-loading to CMHC.
I'm all in favour of putting more discipline into the system, but all major lenders, including the credit unions, have to write off some loans, and, one way or another, the rest of us pay for it.
I support the credit unions and value their strategies, which seem to me to be more conservative than those of the major banks. When a CU mortgage defaults, it eventually affects my return as a member. In theory, at least, that ought to be an incentive for the CU to be more responsible in its lending practices. I'd love to see some stats if anyone has any.
5:18 am
December 17, 2016
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Loonie said
I'm all in favour of putting more discipline into the system, but all major lenders, including the credit unions, have to write off some loans, and, one way or another, the rest of us pay for it.
It's not just about default, it's also about the cost of carrying the mortgage loan risk. Currently, that cost is minimal to the banks because of off-loading, while the CMHC is carrying just under $600 billion in mortgages at the risk to ALL Canadians.
Because of that limited risk to the banks, the interest rates they charge for mortgages can be seen as artificially low. The CUs, on the other hand, have to compete in that low interest rate environment and also bear the complete mortgage risk.
5:54 am
October 21, 2013
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It seems to me that when you bear the risk, it is likely to make you more prudent. If you know you can off-load it, this would be an incentive to be more careless about risk. Still, there are limits, and CMHC has them.
I'm no expert, but I don't see why the banks should be increasing their dividends if they're also tapping the public purse. That simply means that the public is subsidizing a small segment of the population who have more money - the very same group who are constantly complaining about their taxes - which, in the case of bank dividends, are exceptionally low.
But I'm not sure that this is what happens. I have read that CMHC is quite solvent, paying out far less than it takes in, and does not have to raid the treasury. Perhaps someone can point to the stats on that. If true, I would be more worried about the Federal Govt deciding to raid the CMHC kitty to help its budget, although I'm not sure if they can do that.
Those who hold CMHC-insured mortgages do pay hefty premiums to have them, with interest. And if they default, CMHC will go after them for any losses incurred if the property sells for less than is owed on it. the premium really insures the bank's risk, not the purchaser. http://www.moneysense.ca/save/.....otect-you/
We do need to continue to ensure that there are provisions which make it possible for younger people to own a home, although this is admittedly becoming next to impossible in some markets. So far, all we've come up with is suppressing interest rates, CMHC insurance, and, in the case of Vancouver, taxing non-resident purchasers. There are also some more innovative approaches coming along, like co-housing. These need to be explored further.
6:59 am
December 17, 2016
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Loonie said
the premium really insures the bank's risk, not the purchaser. http://www.moneysense.ca/save/.....otect-you/
The banks DON'T have a single dollar at risk - from the article you cited
"it’s true that banks aren’t on the hook for loans that have been CMHC insured"
"what about that big fat insurance premium I paid when I took out the mortgage?"
"You mean the one you rolled into your mortgage and immediately started paying interest on? That insurance premium? That was just to get CMHC to cover the bank’s butt. You didn’t think the bank would have given you all that mortgage money without CMHC’s guarantee, did you? Not on your life. You would have had to jump through hoops of fire to qualify for that mortgage if CMHC hadn’t promised to cover the loan."
"Once your mortgage has been in default for three months, legal proceedings are started through power of sale and the bank takes possession of your property."
"The bank sells the property and submits a claim to CMHC for any shortfall."
Let's put the onus back on the ever increasingly rich banks, where it rightly belongs.
7:05 am
December 17, 2016
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Loonie said
We do need to continue to ensure that there are provisions which make it possible for younger people to own a home ...
Everything I've read of late, says millennials have ZERO interest in home ownership and it has ZIP to do with affordability.
7:36 am
October 27, 2013
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Top It Up said
Everything I've read of late, says millennials have ZERO interest in home ownership and it has ZIP to do with affordability.
Childless millennials may not have interest in home ownership, especially beyond a condo, but once kids come along, the millennials I see then become motivated to find the additional space and convenience. The issue then becomes affordability
8:32 pm
October 21, 2013
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Agreed, the bank's risk is insured. That's what insurance means.
If it weren't so, the big banks probably wouldn't finance this kind of mortgage, or else they would charge a premium rate similar to insurance. But that is not their market.
I think the main reason some millenials aren't interested in the housing market is because they are still working on getting a reliable income.
A newly married millenial couple bought the house next to me 2 years ago, and I'm in an expensive market. They both have professional incomes. And I can think of other examples, as I'm sure most of us can.
Anyway, we're way off topic. I'm out.
4:40 am
December 17, 2016
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Loonie said
... the bank's risk is insured. That's what insurance means.
I'm concerned you still don't get it ... you do understand that CMHC is a federal crown corporation, right?
Again, the bank doesn't have any risk from CMHC mortgages . they're merely an intermediary, a mortgage broker, and getting paid handsomely with the support of the government-owned CMHC and the taxpayers. And, Canadians get all exited about ATM fees banks charge.
9:15 am
September 11, 2013
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Re risk, my Mom is a low-income senior and she owns some bank shares. Her pension plan, CPP, owns bank shares. Everybody who has retirement investments or a workplace pension plan of some kind likely owns bank shares, maybe lots more than they realize. I'm guessing few households in Canada don't own bank shares in some way.
And in my experience millennials who can buy houses do. Those who can't say they're not interested - just like the boomers who said they were going to be anti-establishment hippies until they got their opportunity to grab the dough and then turned into the biggest consumers humanity has ever seen.
3:46 pm
December 12, 2009
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Top It Up said
This is their statement with respect to CDIC -"If you’re a CWB customer, it’s important to know that your deposits at CWB will be combined with your deposits at CDF when considering the CDIC maximum coverage limitation."
Is this normal for banks and and their supposed "separate" online bank subsidiaries?
Not necessarily. Actually, in the case of PC Financial, your deposits are combined with your CIBC deposits held in the same beneficial ownership, in determining your CDIC-eligible deposits. CDF has always been, essentially, a "branch transit" of Canadian Western Bank, even if Canadian Western Bank staff have no access to CDF accounts. This is similar to the former "HSBCdirect" that operated under a separate transit of HSBC Bank Canada. 🙂
Tangerine Bank is separate in terms of CDIC as they are, frankly, a separate wholly-owned subsidiary and separate CDIC member from their parent company, The Bank of Nova Scotia. 🙂
That said, thanks Peter for the update. I guess I missed this! Curious timing as this comes one year after their migration to the Temeno core banking system that many credit unions, including Coast Capital Savings, use and a year or two after their sale of Canadian Direct Insurance to Intact Financial, which has now been discontinued as a separate brand (having been previously known as HSBC Direct Insurance) and amalgamated in with its Belairdirect brand. I think it'll continue as a separate "branch transit" for now, but this gives CWB "optionality" should they decide to either: (a) "double down" and make an acquisition in light of increasing banking competition or (b) exit the virtual retail banking market and sell it, potentially, to the likes of a Meridian Bank, Coast Capital Savings, Alterna Bank or even to Tangerine. 😉
Cheers,
Doug
3:48 pm
December 12, 2009
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AltaRed said
I believe it is if CDF is simply a division of CWB as compared to a separate corporate entity.Similar to PC Financial which is actually a division of CIBC (they have combined CDIC coverage). Which is why I speculate CWB may be thinking of the Soctia/Tangerine model (separate corporate entities).
Don't much care either way. My only business with CWB/CDF is CDF's HISA in which I currently only have a pittance in it.
Disagree on that. They don't state they plan to create a separate subsidiary. It's just about creating a new "brand," to give them optionality in the event they decide to sell (or get an offer) for the deposits and loans from their Canadian Direct Financial/Motive Financial "branch transit". 🙂
Cheers,
Doug
5:40 pm
December 12, 2009
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While I'm going to say this is "definitely" what's happening, it's possible that, as part of the switch to the Motive Financial brand, they may be looking at eliminating their no fee chequing account. Now, a debit card is definitely still included but what they might be doing is basically incorporating/merging their no fee chequing & savings accounts so that essentially the "Savings Account," which will likely be renamed as well, can serve as both a "savings" account and a day-to-day banking account and allow everything a "chequing" account can except the ability to write cheques (sorta like what EQ Bank is doing except with a debit card this time). They mention specifically about re-positioning the brand around "building wealth" for their clients through savings, potentially adding this direct channel as a new channel to distribute their mutual fund offerings and on "reduced fees". Note the word "reduced," not "no". I have questions in to Motive Financial via their Facebook page and will let you know what, if anything, they have to say.
Keep in mind...I say this because they never really did build any sort of significant scale, probably in part due to their brand, lack of advertising and lack of availability in Quebec. 🙂
Cheers,
Doug
2:50 pm
March 20, 2017
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I guess the one big question I have here is will Motive Financial have CDIC insurance? I called CDIC and they have no information for CDIC coverage for either Canadian Direct Financial or Motive Financial. Canadian Western Bank is listed as insured, but how can anyone guarantee that CDF and Motive are/will be covered. There is little to no information on this. Any comments?
JJ
4:27 pm
February 17, 2013
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Is it even possible to operate a bank/credit union without SOME kind of coverage? Either CDIC or the province it is located in. CDF website says we are insured through CIDC.
"At CDF, a part of CWB Group, your chequing, savings and investments are eligible for deposit insurance through the Canada Deposit Insurance Corporation (CDIC), and backed by the strength and security of the CWB Group If you’re a CWB customer, it’s important to know that your deposits at CWB will be combined with your deposits at CDF when considering the CDIC maximum coverage limitation."
I assume Motive will be included under that umbrella
Hope they don't mess thing up too badly. I'll have to find a new everyday bank. Rumors and conjecture aside, we'll just have to wait to find out the details.
7:52 pm
September 11, 2013
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Peter's first post that started this thread indicates CDF is just changing its name to Motive Financial, there is no new entity being created here. CDF/Motive is part of CWB which, as Rick point out, has CDIC coverage.
10:02 pm
April 6, 2013
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Canadian Direct Financial, soon to be Motive Financial, is not a legal entity. It is just a name used by a division of Canadian Western Bank. Because it is not a legal entity, Canadian Direct Financial can't be a CDIC member. That's why CDIC cannot supply information about Canadian Direct Financial.
All Canadian Direct Financial branded deposit products are legally products of CDIC member Canadian Western Bank. Any CDF branded deposit accounts are actually deposits with CDIC member Canadian Western Bank. Soon those accounts will be rebranded as Motive Financial accounts. But, they will continue to be deposits with CDIC member Canadian Western Bank.
If you look at agreements for the CDF products, you will see that the agreements are between you and Canadian Western Bank. 
10:13 pm
April 6, 2013
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Rick said
…. CDF website says we are insured through CIDC.
"At CDF, a part of CWB Group, your chequing, savings and investments are eligible for deposit insurance through the Canada Deposit Insurance Corporation (CDIC), and backed by the strength and security of the CWB Group If you’re a CWB customer, it’s important to know that your deposits at CWB will be combined with your deposits at CDF when considering the CDIC maximum coverage limitation."
…
I would interpret that statement as follows:
"At CDF, a part of CWB Group, your chequing, savings and investments are [actually deposits with CDIC member CWB and are] eligible for deposit insurance through the Canada Deposit Insurance Corporation (CDIC), and backed by the strength and security of the CWB Group. If you’re a CWB customer, it’s important to know that your deposits at CWB will be combined with your [CDF branded] deposits when considering the CDIC maximum coverage limitation."
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