Comprehensive Audits, and New Financial Consumer Watchdog Groups Needed For Effective Bank and Financial Services Industry Accountability
Friday, January 30, 2009
OTTAWA - Today, Canada’s leading bank accountability coalition
called the federal Conservatives' budget proposals on credit cards and
financial institution lending weak and as negligent as the measures
federal governments in the past 20 years.
Federal Finance Minister Jim Flaherty has talked a lot about ensuring Canadians are charged fair prices for banking over the past year, but did nothing before last Tuesday except meet with bankers behind closed doors a few times, and give them a no-strings-attached $95 billion total subsidy.
In the Conservatives' so-called "Economic
released on Tuesday, they proposed only: to increase the subsidies to
federal financial institutions in various ways up to $200 billion more
(with no strengthened disclosure requirements or audits to track what
banks are doing with Canadians' money); to attempt to create a national
securities regulator to reduce costs for business (with no guarantee of
stronger enforcement of securities laws); to strengthen the disclosure
requirements for credit card rates and fees for federal financial
institutions and impose a minimum payment delay period; to strengthen
disclosure requirements for mortgage insurance, and; to create a task
force on financial literacy (which will be redundant given the
of the Financial Consumer Agency of Canada (FCAC) among other federal
and provincial financial education agencies).
"No corporation has a right to gouge or unjustifiably cut services, especially when providing an essential service such as banking or trying to recoup self-inflicted losses like the banks are suffering from, but the Conservative government is continuing the negligence of past federal governments by subsidizing the big banks and other financial institutions with hundreds of billions of taxpayer dollars while failing to effectively require them to maintain loans to creditworthy customers and serve everyone fairly and well at fair prices," said Duff Conacher, Coordinator of Democracy Watch and Chairperson of the CCRC. Every survey done in the past decade has shown 90 percent of Canadians believe banking is a service essential for functioning in society.
The Canadian Community Reinvestment Coalition (CCRC),
and made up of 100 citizen groups from across Canada with a collective
of more than three million citizens, called on
Finance Minister Jim Flaherty to work with opposition parties for
effective bank and financial institution accountability by:
Financial service industry customers and investors are
currently gouged with extra charges that companies in the industry use
to pay their more than $200 million annual costs for industry advocacy
efforts (advertising, lobbying, political donations and gifts).
The most effective way for the federal government to balance the
marketplace is to implement the pamphlet method to give customers and
investors an easy way to fund their own advocacy efforts.
With Canada’s big banks recently reporting a total of $16
dollars in losses and writedowns mainly because of their irresponsibly
investments, these measures are needed more than ever to ensure the
banks don't hike rates and fees, and cut lending and services, to
recoup their self-inflicted losses.
"The federal government has allowed a two-tier banking system to operate in Canada where the people who can least afford it pay more for essential basic banking services and basic credit. Any government that wants to help Canadians with low incomes, and help the Canadian economy overall, will regulate Canada’s big banks to ensure they serve everyone well at fair prices, and don't gouge or withdraw service from creditworthy customers," said Conacher.
According to Fortune magazine’s 2007 Global 500 report (based
FY 2006 annual reports), Canada’s big five banks were all within the
banks in the world in terms of profits as a percentage of revenues, and
as a percentage of assets (before their irresponsible investing led to
of dollars of losses and writedowns in the past two years).
Second, the federal government must order the
Bureau to audit the lending records of the banks (by tracking number of
number of approvals/rejections, and number of called loans in all
and small and medium-sized business loan categories), and to evaluate
actual level of basic banking service competition in communities across
for the past 10 years.
In addition to having the Financial Consumer Agency of Canada (FCAC) examine profit levels for credit cards and service charges for the past decade and annually in the future (To see details about this proposal, click here), and the Competition Bureau examine lending records and competition levels across Canada for the past decade and annually in the future (To see details about the U.S. requires this under the Community Reinvestment Act (CRA), click here -- To see details about the $4.5 trillion in reinvestments that have resulted from the CRA since 1977 (in a PDF-format document), click here -- To see the CCRC's position paper describing how this bank accountability system should work, click here), the federal government should finally actually regulate Canada’s banks and investment companies through the following actions:
For more information contact:
To see the CCRC's analysis of the flaws in Bill C-37, which changed the Bank Act and other federal financial institution laws, and passed into law in April 2007, click here
Canadian Community Reinvestment Coalition
P.O. Box 821, Station B, Ottawa, Canada K1P 5P9
Tel: (613) 789-5753
Fax: (613) 241-4758
Copyright 2009 Canadian Community Reinvestment Coalition