Public Accounts committee  It's safe to say that back in 2007, when the ABCT problem started to appear, SAC started to meet on a much more frequent basis. At the height of the crisis, it wasn't uncommon to have two meetings a day.

Public Accounts committee  In short, I would say yes. Absolutely. We are keeping a close watch on that. Let me remind you that, in 2008, even before the crisis was at its peak, the government changed the criteria for insured mortgages. It has since taken action twice, including last January, tightening up the criteria again.

Public Accounts committee  One thing we did—last April, I believe—was to make the criteria stricter for people who were applying for a mortgage. They must qualify for a five-year rate, even if they get a one-year mortgage. The five-year rate is normally higher than the one-year or two-year rate. Most people take out a short-term mortgage, but we want to make sure that, if interest rates increase, they will be able to handle a higher rate.

Public Accounts committee  Yes, and the challenge oftentimes is that different countries have different starting points. You can't just wipe the slate clean and start over. You have to deal with the circumstances you're facing at the time. But I think it's fair to say that there has been a fair amount of interest.

Public Accounts committee  They were already government-insured mortgages, so they're already backed by the full government guarantee, so there was essentially no risk.

Public Accounts committee  By “application”, I assume you mean how they could take those practices and apply them domestically.

Public Accounts committee  One thing I would point to—it's been alluded to through the discussion today—is the regular five-year review of the financial institution statutes. It's quite unique. We've never come across any other jurisdiction in the world that has this kind of mechanism that forces a regular look at the statutes and the regulatory framework to ensure that it remains current.

Public Accounts committee  I would say yes, because they certainly have multiplied over recent years. So on the demands on us to participate in different international fora, different working groups, standing committees, etc., whether it be in the G-20, the Financial Stability Board, at the IMF, etc., there's certainly a lot of interaction with international stakeholders.

Public Accounts committee  There were a number of programs that were put in place to make financing available. As you say, some of them weren't used, especially the guarantee facilities. The lender's assurance facility and the one for the insurance companies as well were never used. Some of the other measures, like the insured mortgage purchase program, were used, although not to the maximum.

Public Accounts committee  At Finance, we set the legislative and regulatory framework, in collaboration with the financial sector agencies, but it is up to OSFI, as a prudential regulator, to do the day-to-day supervision and ensure that there are risk management practices and controls in place inside each institution to adequately manage those risks.

Public Accounts committee  If I can jump into this debate, I would say that the exercises that were done in the United States and in Europe had very different goals from the stress tests that we did here in Canada and that are a tool we very often use when overseeing financial institutions. In the case of the United States and Europe, it is very well known that some financial institutions were undercapitalized and vulnerable; they had to be recapitalized.

Public Accounts committee  The situation is very different because our banks are not undercapitalized. We had no shortfall in capital to make up. Doing that kind of exercise with a view to recapitalization was not appropriate in Canada. We were in nothing like the same situation.

Public Accounts committee  That is hard for me to say. We have been working on it for some time and we hope to finish as quickly as possible.

Public Accounts committee  I think that you are linking two things that are really different. Essentially, the stability of the financial institutions, well before the crisis, allowed them to get through it. With some measures, in fact…

Public Accounts committee  No, I am saying that the acquisitions that are perhaps going on at the moment were not financed by the government in any way. Those are two quite separate matters. Having solid capitalization really is what allows an institution to expand its scope. The acquisitions we can see today are not because of government assistance in the form of liquidity on the financial markets.