Politics
No secret fed bank bailout: Flaherty official

Canada's Finance Minister Jim Flaherty

Credits: REUTERS/CHRIS WATTIE

MARK DUNN | QMI AGENCY

OTTAWA - Guesswork by a left-leaning think-tank that Canada's major banks were secretly bailed out by the federal government during the 2008-09 global financial crisis were shot down Monday.

Finance Minister Jim Flaherty's office said a report by the Canadian Centre for Policy Alternatives is "completely baseless" in its opinion that $114 billion in the form of loans, cash and mortgages was used to save banks.

"To be clear, despite conspiracy theories to the contrary, there was no secret bailout," Flaherty's director of communications Chisholm Pothier said.

The centre said "despite all the rhetoric about the stability of Canada's bank system," its research suggested Canada's big banks started receiving American and Canadian government help in September 2008 through 2010.

It also acknowledged its study was incomplete because it could not get access to Bank of Canada and Canada Mortgage and Housing Corp. documents.

Pothier said the government did extend credit at competitive interest rates to banks and used other measures to help them during the worst global financial crisis since the Depression.

"Not only did these measures play an important role in supporting Canadian business during the credit crunch, they also made money for taxpayers."

The government was willing to provide up to $200 billion to support lending to consumers and businesses through the Extraordinary Financing Framework (EFF) as part of the government's highly publicized economic action plan.

Measures like the well-known Insured Mortgage Purchase Program (IMPP) allowed the government to buy $69 billion in insured residential mortgages pools from financial institutions to allow them to continue lending.

The program operated at no cost or additional risk to taxpayers since they were already considered contingent liabilities for the government.

To date, the IMPP has generated more than $1.2 billion in net revenues and is expected to double that by the time the program ends in 2014-15.

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