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In response to comments made by TD Bank's (TD +0.9%) CEO, Canadian Finance Minister Flaherty...

In response to comments made by TD Bank's (TD +0.9%) CEO, Canadian Finance Minister Flaherty says that while Ottawa stands ready to clamp down on consumer lending, banks should exercise this "prudence" themselves, rather than relying on the State.
Comments (4)
  • Poor Texan
    , contributor
    Comments (3529) | Send Message
     
    Prudence? Does anyone know the definition of this word?
    23 Dec 2010, 01:24 PM Reply Like
  • nyuszika45
    , contributor
    Comments (633) | Send Message
     
    Up here Canadians actually own their national Bank - bought it (from the upstarts who began a FED copy in 1934) in 1936, I believe. It makes a world of difference in policies. I think you can also read in that statement the implied "if you overextend yourself, it will be your shoulders, not ours that bear the burden", no?

     

    Nice change from US mercantilism as our version is a bit lite, as it were.
    23 Dec 2010, 01:29 PM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    The underlying issue is that growing debt loads for some Provinces, a per capita personal consumer debt load comparable to that in the US, concern about whether slowing European and Asian demand for Canadian commodities and the lackluster speed of the global recovery cumulatively are causing moderate concern that the Canadian economy, which has suffered only a mild to moderate domestic recession over the past two years or so, may experience
    (a) a couple or more of quarters of stalled recovery, and
    (b) a housing bubble.

     

    While the Federal Government including the CMHC, the Provincial Governments, the Bank of Canada and the Chartered Banks and the Credit Unions have cooperated reasonably well to date to keep domestic spending within a reasonably optimal range, the Chartered Banks are increasingly experiencing conflicting pressures (i.e. individually should they encourage increased consumer debt accumulation in their pursuit of market share and stable profits or should they collectively take a lead in cooling unsustainable consumer demand; the latter being what the Governments and Bank of Canada call for them to do?). The Federal Minister of Finance, in turn, has three reasons for wanting the Banks and Credit Unions to take the lead in cooling consumer debt accumulation that is unsustainable:
    (a) This is good public policy at present.
    (b) If others take a lead, then the burden the Federal Government must assume in promoting good public policy is correspondingly reduced.
    (c) If the Federal Government is forced to take the lead alone, it will experience the political blame for the negative effects many will experience.

     

    In short, the Chartered Banks and the Minister of Finance are currently engaged in a game of ‘pass the hot potato’; that potato being the blame for tightening consumer credit and a slowing domestic recovery.
    23 Dec 2010, 07:19 PM Reply Like
  • nyuszika45
    , contributor
    Comments (633) | Send Message
     
    I cannot forget Mark's comment that Canada will mirror the US money issues in the face of another round of QE, i.e., potentially trying to re-inflate something that should probably be allowed to deflate; however, taking the latter position might require accepting the idea that there should have been TBTF political donors.

     

    Overdosed on cynicism - hand me that bottle of Scrooge, please.
    27 Dec 2010, 12:44 PM Reply Like
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