For more information, see the direct blog post here and the discussion here.But it doesn’t seem to be as simple as “Canadian banks are more tightly-regulated”.
1. We never had restrictions on interstate banking, so Canadian banks spread their assets and liabilities across Canada. (So it doesn’t matter if a local housing market goes bust).
2. We don’t have Glass-Steagal. The investment banks joined the retail banks some years ago.
3. We don’t have mortgage interest deductibility from taxes. So paying down your mortgage is a tax-free investment. So most people want to pay down their mortgages.
4. (Except in Alberta), mortgages are fully recourse. You can’t just walk away from a negative equity home and hand the keys to the bank; the bank will come after you for the difference.
I wouldn’t describe those differences as “Canada is more regulated”.
But we do have higher capital requirements. And mortgages over 80% must be insured (mostly by the government-owned CMHC).
Against federal usury laws for credit cards
2 hours ago
2 comments:
Our banks are always at a comparative long-term growth disadvantage because bad banks in other jurisdictions get bailed out.
Corporations are overpaying CRA on purpose. You good skim off a small interest rate tax to repeat traders and give the proceeds to tax payers who pay large accurate amounts. Call it a Greed Shift.
...a solution may be to encourage Canadian bank investment in foreign banks that are too big to fail, where the foreign budgets are in surplus (China, India, OPEC-banks). Small ownership stakes rather than actual takeovers as an M/A strategy. Buffett has already provided a model to invest safely in ABCP; money up front and a high investment RoR.
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