Bigger and bigger profits for the banks.
An Act to amend the law governing financial institutions and to provide for related and consequential matters
This bill is from the 39th Parliament, 1st session, which ended in October 2007.
This bill is from the 39th Parliament, 1st session, which ended in October 2007.
Jim Flaherty Conservative
This bill has received Royal Assent and is now law.
This is from the published bill.
This enactment amends a number of Acts governing financial institutions. It also amends legislation related to the regulation of financial institutions. Notable among the amendments are the following:
(a) amendments to the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, and the Trust and Loan Companies Act aimed at achieving three key objectives:
(i) enhancing the interests of consumers,
(ii) increasing legislative and regulatory efficiency, and
(iii) adapting those Acts to new developments;
(b) amendments to the Bills of Exchange Act to provide for the introduction of electronic cheque imaging; and
(c) technical amendments to the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, the Trust and Loan Companies Act, the Bank of Canada Act, the Bills of Exchange Act, the Canada Business Corporations Act, the Canada Deposit Insurance Corporation Act, the Canadian Payments Act, the Financial Consumer Agency of Canada Act, the Green Shield Canada Act, the Investment Canada Act, the National Housing Act, the Payment Clearing and Settlement Act and the Winding-up and Restructuring Act.
All sorts of information on this bill is available at LEGISinfo, an excellent resource from Parliament. You can also read the full text of the bill.
Bill numbers are reused for different bills each new session. Perhaps you were looking for one of these other C-37s:
Pat Martin NDP Winnipeg Centre, MB
Bigger and bigger, there is no such thing as too much profit for the banks.
One of the right-wingers said that we should nationalize the banks. What an extremist point of view. I am going to use that in my literature the next time there is an election campaign.
The segue between the last bill we debated on offshore tax havens and the bill we are presently debating on Canada's chartered banks and financial institutions is interesting, because there are no worse culprits for tax avoidance and being tax fugitives than the big banks that are abandoning the inner city of Winnipeg. They are abandoning the inner city of Winnipeg and setting up shop in Barbados, the Cayman Islands and everywhere else they can think of to avoid paying their fair share of taxes in our country.
Pat Martin NDP Winnipeg Centre, MB
They are masters at it. They have hundreds of tax lawyers working for them, looking for ways to avoid paying their fair share of taxes. I call them tax fugitives hiding out in tax havens. They certainly are not living up to their commitments to the good people of the riding that I represent. They abandoned my riding and I will never forgive them for it. Frankly, I will not bank in a major chartered bank in this country and I do not care who knows, although I guess everybody knows now.
There are many things that could have been done with this piece of legislation to try to impose some fairness into the financial institutions regime in this country. I remember when the former leader of the NDP, currently the member for Halifax, and I used to crash the shareholder meetings of the major banks. We had nine resolutions that we would put forward at every bank meeting. Two of them almost passed.
One of the resolutions that I moved at the Bank of Montreal failed to pass by less than 1%. In fact the result was 49.6 to 50.4. I remember because it was the same ratio as the Quebec referendum, 49.6 to 50.4. That resolution was gender parity on the board of directors. We came that close to dragging the banks into the 21st century kicking and screaming all the way, but the shareholders clearly wanted modernization of the banking system or they would not have supported gender parity on their own board of directors within one-half of one percentage point. We were very proud of that.
The other resolution that almost passed, and this one almost gave the CEO a heart attack, was that the salary of the CEO would be limited to 20 times that of the average employee. It would still be 20 times what an ordinary human being made, but CEOs were making 200 times and 300 times that of an average employee. That, sadly, did not succeed as a resolution.
It gives some indication of the amount of work that needs to be done if we are going to have a fair regime governing our financial institutions in this country, first to provide reasonable access to every person in this country. Whether people have any money or not, they deserve the right, and in fact they have the statutory right, to basic banking services. Even if people do not have any money but they want to open a bank account, they have to be allowed to open one. Do Canadians know that?
We would drive the payday lenders right out of business. People who have relationships with banks and need to borrow an extra $100 to get them through until their next paycheque could simply use their overdraft the way I or my colleagues do and pay a surcharge of a couple of dollars for that privilege instead of having to pay a surcharge beginning at 1,000% interest. Some of these institutions charge 10,000% interest on a simple loan. On title loans these companies are actually lending people $1,000 and making them sign over the title of their homes as collateral. If they fail to pay off the loan, they run the chance of forfeiting their homes.
Pat Martin NDP Winnipeg Centre, MB
This is unbelievable in a civilized society, as my colleague from New Westminster—Coquitlam pointed out.
I do not know why the Liberals and Conservatives refuse to address these basic inequities in the financial sector. It used to be they relied heavily on the big banks to finance and bankroll their political parties. That is not allowed any more. News flash: They do not have to be afraid of the banks any more. The banks are not allowed to give political parties money any more.
The banks would always line up with wheelbarrows full of money. They would dump an equal amount on the Liberals and on the Tories, but the laws have changed. We no longer have to be afraid of the big banks. If we stand up on our hind legs we can actually demand service from the big banks without jeopardizing our political future. It is a liberating feeling to be able to tell the truth about the banks without having to worry about our donations drying up. That was the beauty of the changes to the election financing laws.
It begs the question, what is the barrier now? If it is no longer money, why do we not force the banks to live up to their obligations under the current Bank Act? Why do we not amend the Bank Act to make it even better so it serves the best interests of Canadians?
Pat Martin NDP Winnipeg Centre, MB
My colleague from Nova Scotia, a Conservative, is agreeing with me. Now and then that Conservative member has the odd lucid moment I have noticed. It may be that in his home community he has suffered the same indignity as I have, that the corner banks are closing their doors, folding up their tents and abandoning us. They are bailing out. They have more investments offshore than they have in our own communities. We grant them a charter to exist and give them the exclusive monopoly to make a fortune on certain financial transactions and they refuse to live up to their end of the bargain. That is where I find fault. The little guy is not getting a fair shake from the big banks.
We create our own credit unions and we are left with the least profitable side of banking that nobody else seems to want. We seem to make it work. We are making it work in the non-profit sector through a vibrant credit union system throughout the land, but that is still no excuse. We cannot afford to backfill every place the banks have abandoned us, we simply cannot. No credit union can.
Imagine how devastating it is to represent an old established neighbourhood like mine and see 15 bank branches close their doors. There is another place in which they are failing to live up to their commitment. Right in the Bank Act it says that if a bank wants to close a branch, it has to have public meetings. It has to deal with the inconvenience to the long-standing customers. It has to help them find alternate banking services within a reasonable distance. One of the banks was even ordered to provide a van to drive seniors from the existing branch to the new branch, which was all the way across town. That lasted exactly four months. The van disappeared and the seniors at the Blue Bird Lodge in the inner city of Winnipeg are without service. It is just not working.
I am here to serve notice that the current Bank Act lets Canadians down. The Bank of Canada had Arthur Anderson as its auditor of record for the whole time of the Enron scandal. I have no confidence in that particular system.
I am very concerned though that Bill C-37 is a lost opportunity, because the very things that I point out as being urgent needs for the communities that I have cited I do not find anywhere in the hundreds and hundreds of complex amendments to complex acts in here.
I would urge the government to get back to the basics and listen to what Canadians are saying. They are sick to their stomachs. Get back to the people. Let us do what is best for ordinary Canadians for a change, not for whoever gets affected.
Pat Martin NDP Winnipeg Centre, MB
My colleague from Surrey is saying let us do what is right. What better way to summarize why we were sent here. My colleague from New Westminster says it is despicable and my colleague from Surrey is suggesting that we do things right.
I do not think that is too much to ask. We were sent here on a mission to represent the views, the needs and the concerns of the people we represent. In the inner city of Winnipeg, one of the primary concerns of people is the complete lack, an absolute paucity of basic financial services. They are being forced to use payday lenders who I think are morally and ethically reprehensible. There is no lower form of animal than someone who would prey on human misery and exacerbate the poverty of low income people, stealing from the poor to give to the rich.
The last thing I would point out is if we are serious about putting a lid on organized crime, we should cut off their ability to raise money and cut off their ability to launder money. I say without any hesitation, without any fear of contradiction whatsoever, money, ill-gotten gains, is being laundered through these payday loan outfits in my riding and every riding in this country. If government were serious about stemming that tide and choking off their ability to carry on organized crime, this would be an important step that it should take.
Bank ActGovernment Orders
The Speaker Peter Milliken
When debate resumes on this matter, there will be 10 minutes of questions and comments for the hon. member for Winnipeg Centre.
The House resumed consideration of the motion that Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters, be read the second time and referred to a committee.
Olivia Chow NDP Trinity—Spadina, ON
Mr. Speaker, I rise before you to speak on behalf of Canada's banks. Yes, that is right, I am empowered to speak on their behalf. I am in fact their member of Parliament. Canada's major banks and most of the insurance companies all have their dazzling, beautiful towers in my riding of Trinity—Spadina. So does the Toronto Stock Exchange, at the fabled intersection of King and Bay.
I am their member of Parliament, so I must speak up on their behalf.
Technically they are not citizens and do not have a vote, although they have certainly bought plenty of influence with the government over the years. They have poured, I am told, thousands of dollars into the coffers of the Liberals and the Conservatives, though none to the NDP, I must admit, and none to my campaign in the last election.
However, I am fair. I represent every constituent. The banks are constituents. If we read their annual reports and corporate responsibility statements, we see that they all claim to want to be good corporate citizens. I am here to plead on their behalf, to encourage members to help them to be good corporate citizens, to consider the bank act amendments as a golden opportunity to help the banks come to terms with their role and to help further the role of government in fostering a healthy economy and economic opportunity, prosperity and security for every single Canadian.
That is what the banks say they want, so let us help them. Let us show them how they can do a better job and enshrine the right regulations in legislation to keep them from going astray of their ideals. Let us ensure they are guided to make the best possible investments, and investments in Canada, not in offshore tax havens.
Let us ensure that we protect the sovereignty of the financial system that is so important to our independence and role in the world. That would be good citizenship.
The banks have grown and prospered. Surely citizenship demands reinvestment in every geographic region, community and sector, and for all Canadians, regardless of income level.
My colleague, the hon. member for Winnipeg North, has already pointed to the problems in many communities. They have been abandoned by the big banks. They are denied fair and equal access to banking services. This is the result of mergers. We need to protect against this and help banks fulfill their duties as corporate citizens.
Bank charters provide a protected privilege, but Canadians are owed something for this privilege. Let us ensure availability and access. Banks used to pride themselves on the fact that it costs the same for services in Yellowknife as it does at King and Bay. My constituents demand it. Let us ensure that bank profits are fair and fairly taxed. That would help.
Let us look at credit card rates. As I said earlier, this bill is an opportunity for renewal and change in the way banks work with Canadians. Canadians, particularly low income Canadians, are gouged daily by ridiculously high credit card interest rates. The gap between the prime lending rate and the rate most credit cards charge has never been bigger. It is time to cap credit card interest rates to five points above the prime rate. Five points is quite a lot.
The prime rate today sits around 6%. At the same time, the banks are charging upward of 18% to 19% for credit card interest. It is time to reduce the interest paid on the almost $44 billion in credit card debt owed by average Canadians. That is right: $44 billion. That is higher than Brian Mulroney's record federal deficit in 1992-93. I would like everyone to remember that. A $44 billion debt is carried by average Canadians because of huge credit card interest rates.
The Liberals refused to protect consumers from outlandishly high credit card rates. They argued that there were lower credit card rates available elsewhere. However, far too often, lower income people who have poor credit ratings cannot qualify for these lower interest cards. This is the time for the government to take real action to protect average working families from high interest rates and real action to improve our national economy by improving the disposable income of average Canadians.
There is simply no justification for maintaining high credit card interest rates during this period of steady and declining interest rates, thus making the need to cap credit card rates at 5% above prime a necessity today.
I also want to speak about affordable housing and mortgage insurance, which is also part of Bill C-37. I noticed that deep within this bill are amendments to the National Housing Act, the act that legislates the Canada Mortgage and Housing Corporation.
The former prime minister, as part of his government-wide commercialization initiatives in the 1990s, steered through some amendments to the National Housing Act in 1998 that were widely opposed by affordable housing advocates and cities.
Those amendments limited the role of CMHC in working with municipalities and community based housing providers in developing innovative new ways to create desperately needed new affordable homes, while at the same time opening the CMHC mortgage insurance business to the private sector.
Mortgage insurance has been very lucrative as Canada's housing market has been secure for the most part. Because of the Liberal era restrictions on CMHC, the housing corporation has been generating huge surpluses without being able to spend those on new affordable homes. In fact, we know the surplus to be $5 billion. Basically, it is taking this money, billions of dollars in premiums, and paying out almost nothing. We know that affordable homes are desperately needed in cities across Canada.
What this bill does is further commercialize or privatize CMHC. That includes opening mortgage insurance business to even more private sector businesses. The problem with this is that it cuts into the lucrative and desperately needed revenue stream for CMHC. This stands, even though it has not been able to invest this revenue, which makes it almost impossible for CMHC to gain any more future dollars.
The current amendments appear to seek to further privatize CMHC, and we must oppose that. CMHC has made a lot of money in recent years and has been providing good service at a reasonable cost and every bit as efficient as the private sector. There is no reason that CMHC should be squeezed out or forced to share this business at all.
We should be able take the funds that are in CMHC and use those funds to build more affordable housing. It is good for our economy and it is good for Canada. We know that we need to invest and we need to change the previous Liberal government policy and allow CMHC to invest a portion of its mortgage insurance earnings into building affordable homes.
We heard earlier today that the affordable housing crisis is something that brings our country together. We are in a desperate situation and we must build affordable housing. We are seeing increased homelessness, massive housing insecurity and substandard housing which, in turn, is leading to a heavy burden on individuals and massive disruptions of communities and local economies and increased costs for government.
We also need to look into small business lending, at service charges and at huge profitability and ask if it might be time to look at the concentration in the financial district, a district that graces my riding. We also need to look at employment, as well as at the loan shops that are popping up in poor neighbourhoods. We need to look at all of those things.
We need to address the act and give it a total overhaul for the good of my bank constituents, for Canadians and for the country. We have the opportunity right now with Bill C-37 to reform the Bank Act and we should take this opportunity. We should not just tinker with the Bank Act. We need to reshape it to reflect current realities and future opportunities right here and now in Canada.
Alexa McDonough NDP Halifax, NS
Mr. Speaker, as I make a few very brief comments on Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters, I want to congratulate my colleague, the member for Trinity—Spadina, who just pointed out some of the consequential matters that arise in relation to the proposed changes that the government has placed before the House of Commons.
I particularly want to commend her for drawing attention to the implications for affordable housing, which we desperately lack, in the bill that is before us, following on the appalling record of the previous Liberal government in having basically pulled the plug on any federal commitment to affordable housing.
I wonder if I might ask the member for Trinity—Spadina if she could explain, in perhaps a little bit more detail, what the implications are of the changes to the National Housing Act that will make the likelihood of affordable housing being made available to those fantastic numbers of people who are currently in crisis even less available to them than it is now.
Olivia Chow NDP Trinity—Spadina, ON
Mr. Speaker, Bill C-37 is squeezing CMHC out. CMHC is being forced to share this business.
If that happens, it means that CMHC will not continue to garner the money as it has been collecting in the last few years. It means that it will not have a large reserve fund. It also means that CMHC will not have the funds it needs to assist a lot of the co-operatives or social housing units that are now quite old and need repair and maintenance. These housing co-ops, these existing affordable housing units need the funds from CMHC to assist in maintaining their buildings. If CMHC does not assist, then some of these co-operatives and some of these affordable housing units may end up going bankrupt and, therefore, we would be shutting down on some of these affordable housing units.
If CMHC has no funding left because of the privatization that is in front of us, it will not be able to provide funds to assist some of these co-operatives that are now in need of taking more funds to subsidize some of the tenants. The tenants need quite a bit of subsidies as they cannot pay market rents. If the tenants were asked to pay market rents, they would not be able to afford some of these co-operatives. The co-operatives are looking to CMHC to fix the section 95 question but for CMHC to be able to do that it needs a pool of money.
As I said earlier, CMHC does have $5 billion at this point but it needs to spend those funds to help build affordable housing, to assist co-ops, to bring in more subsidized units and to maintain and repair some of the older cooperatives.
All of that is required and that is what we need to do, which is why I believe we should strike out the part in this bill that would commercialize or privatize CMHC.
