Wednesday, June 23, 2010

The bailout is in the eye of the beholder?

Frances Russell offers some context for the ongoing saga of the G20 bank tax discussions:
The real charade is Canada's preaching to the world about the strengths of Canada's banking system -- and using that "strength" to lead the opposition to an international bank tax -- while giving Canada's banks a massive bailout.

The financial media have virtually ignored Ottawa's $200-billion low-interest line of credit to help Canada's banks weather the recession and the Canada Mortgage and Housing Corp.'s $125-billion purchase of questionable mortgages and other rotten paper held by the banks when the crash came in the fall of 2008.
The banks, though, don't see it this way and here was the Canadian Bankers Association yesterday:
“Unlike banks in other countries, Canada’s banks have not experienced financial difficulties and did not need taxpayer-funded government bailouts,” said the bankers’ group.

“That’s because our banks have been prudent and well-managed and we have a balanced approach to regulation in this country.
And that latter view is the one that has become conventional wisdom. Background to keep in mind as the Europeans bring their bank tax arguments to the G20 "debate" on the issue this weekend.