Monday, October 22, 2012

Flaherty muses on CMHC privatization

"Flaherty eyes privatization of CMHC." Well that's something big to watch. The Canada Mortgage and Housing Corporation is a profitable Crown corporation ($335 million in profit in the 2nd quarter) and has billions in assets. It is a stabilizing force in the Canadian housing market and by providing residential mortgage insurance, encourages home ownership.

Why would Flaherty go here? The burden should be on Flaherty et al. to demonstrate that moving from what is working to an alternative would be beneficial for Canada. Any move to take us down a road that the U.S. has gone by destabilizing a longstanding public and successful institution like this should be treated with great caution.

It sounds like the Conservatives know this and seem to be backing off, a little, as this news broke today: "Ted Menzies, Flaherty’s parliamentary secretary, responded that the government does not have plans to privatize the CMHC “at this time." At this time, he qualified.

This could be a wallet issue that would resonate if the case is articulated well. Flaherty of the 40 year mortgage adventures should be watched on this very carefully.