Thursday, July 15, 2010

Splitting the national securities regulator: part II

A follow-up here on the big, juicy national securities regulator story. OK, maybe not so exciting. But a fascinating little political power struggle lies within the issue, which is why we are interested. That struggle that is being fed by the Harper government is on the issue of where the new head office of the Canadian Securities Regulatory Authority (CSRA) should be.

A Globe editorial weighed in yesterday on that issue. They view the planned splitting of the regulator's offices across the country as just not on:
The rest of Canada – beyond Bay Street, that is – will not be deceived by the tokenistic gestures of a securities commission with no physical centre. The CSRA should have an avowed head office in Toronto.
A university centre has also released a new study on the national securities regulator, they support putting the regulator in Toronto:
In the wake of a blueprint for the new regulator released Tuesday by the Canadian Securities Transition Office, which dodged the question of a head office locale, the Mowat Centre for Policy Innovation at the University of Toronto’s School of Public Policy and Governance weighed in with a new study.

The 13-page report concluded “that in order to deliver the full benefits of a national regulator, regulatory authority and capacity should be concentrated in a ‘legitimate’ head office in Toronto, where market activity is concentrated.”
And here's the Star:

In summary, the proposed “national” regulator might not be much better than what we have today. “The federal government has opted to allow regional politics to trump good policy,” says Josh Hjartarson of the University of Toronto’s Mowat Centre.

Ottawa needs to take this plan back to the drawing board to create a more robust regulator with a real head office, preferably in Toronto.

And the Sun:
Obviously, the logical place is Toronto, the financial capital of Canada, home of the country’s largest stock market and the third largest in North America, after New York and Chicago. [...]

This is as dumb as a bag of hammers, since the whole idea is to have one national regulator instead of the existing 13 provincial and territorial ones.

Scrapping those offices and then creating up to 13 new regional offices representing a national regulator, would defeat the whole purpose of having one regulator. It would be a purely political decision and an utterly absurd one.
Probably not the last in coming months who will support the same position.

As Benzie's report notes and as we might well imagine with this federal government, Stephen Harper may be the force driving this present reluctance to just do the obvious thing here:
"...Prime Minister Stephen Harper, born and raised in Toronto, told the Commons in May that “as an Albertan, I have no interest in seeing this sector centralized in Toronto.”"
It's understandable that provinces would vie for a head office to be located in their province, that's what they do, premiers are responsible for one territory under their jurisdiction. But it's not understandable when a PM acts like he's got provincial geographical turf to protect. Particularly in a case that's not really close, where there is a clear national choice based on objective facts ("...Toronto, the nation’s financial capital and the third largest banking centre in North America, behind New York and Chicago...").

Even if you give the federal government the benefit of the doubt here and consider that they might be reluctant to choose a head office at this point given that there is a Supreme Court of Canada reference case coming, that they might be holding off until after that occurs...that just doesn't make sense. Alberta and Quebec are going to oppose the federal government's single regulator plan anyway. Besides, Harper certainly doesn't sound like he's just holding off on a choice of a head office, his words say he's decided that it won't be in Toronto. And his planners have proceeded with a blueprint that's giving effect to those words.

This looks like the beginning of a mess that really doesn't need to be, if this government just had it in them to make decisions based on the clear facts before them.