You have 25 seconds.
Evidence of meeting #67 for Finance in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was banks.
A recording is available from Parliament.
Evidence of meeting #67 for Finance in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was banks.
A recording is available from Parliament.
4:35 p.m.
Liberal
John McCallum Liberal Markham—Unionville, ON
Well, I wouldn't even have time to get out the question, so I'll leave it at that.
Thank you very much.
4:35 p.m.
Liberal
4:35 p.m.
Bloc
Roger Gaudet Bloc Montcalm, QC
Thank you, Mr. Chairman.
I too have worked in the field of banking and caisses populaires.
Mr. Phillips, do you represent the caisses populaires in Quebec?
4:35 p.m.
President and Chief Executive Officer, Credit Union Central of Canada
No, I don't. That's Caisses Desjardins. They have their own representation. They are not part of our system.
We are really the cooperative financial system outside of Quebec. But they are good friends of ours.
4:35 p.m.
Bloc
Roger Gaudet Bloc Montcalm, QC
I would like to ask Mr. Conacher a question. In your opinion, what would be an appropriate rate to encourage banks to invest in the community? We know that the people who are the least well off are generally the highest paying customers for institutions like banks, insurance companies and credit unions. What rate of reinvestment would you like to see going into the community?
4:35 p.m.
Chairperson, Canadian Community Reinvestment Coalition
The coalition is not proposing a particular percentage. We would like to see a system that requires the banks to release information on loan applications. The banks grant loans to consumers. The United States have a system and a method to determine whether the person asking for the loan is credit-worthy. The bank has to grant loans to everyone who is credit-worthy; otherwise, the government will ask the bank to take corrective action by developing special programs for people in the community, women entrepreneurs or other, similar lenders. It is not based on a quota or a percentage; it is just a system to verify what exactly the banks do with each application and what goes to each community.
4:35 p.m.
Bloc
Roger Gaudet Bloc Montcalm, QC
But since you represent the Canadian Community Reinvestment Coalition, what would you like to see in the way of a program? That is what I am interested in.
4:35 p.m.
Chairperson, Canadian Community Reinvestment Coalition
We do not want a percentage. We want exactly the same system as already exists in the United States.
4:35 p.m.
Bloc
Roger Gaudet Bloc Montcalm, QC
Explain to me how the American system works. Are they required to provide a certain percentage?
4:35 p.m.
Chairperson, Canadian Community Reinvestment Coalition
No, it doesn't work according to a percentage.
4:35 p.m.
Chairperson, Canadian Community Reinvestment Coalition
It is a service for people applying for loans for a small- or medium-sized business. Suppose that 500 of the 1,000 applicants are black. The banks need to grant an equivalent amount of loans to the black and white applicants. The blacks are just as credit-worthy as their white counterparts. However, the statistics in the United States show every year that the banks discriminate against blacks, Hispanics and visible minorities. That is one of the reasons that we need to have the same system in Canada, in order to be able to check whether there is discrimination.
4:40 p.m.
Bloc
Roger Gaudet Bloc Montcalm, QC
Personally, I would not compare us to the Americans, because I do not think that Quebeckers and Canadians are racists in this respect.
4:40 p.m.
Chairperson, Canadian Community Reinvestment Coalition
We may think that, but there are no statistics to prove it. A survey made by the federal government in 2002 showed that there were problems, depending on the kind of person applying for a loan.
4:40 p.m.
Bloc
Roger Gaudet Bloc Montcalm, QC
Would this not be due to their insolvency rather than their skin colour?
4:40 p.m.
Chairperson, Canadian Community Reinvestment Coalition
Precisely. But this was only a small survey. In 1999, the government created a system called the Small and Medium-sized Enterprise Financing Data Initiative. Statistics Canada carries out the surveys in partnership with Industry Canada, but the sampling is too small to truly evaluate bank loan programs in every region of Canada, or to include everyone who wants a loan.
4:40 p.m.
Conservative
Dean Del Mastro Conservative Peterborough, ON
Thank you, Mr. Chair.
I would like to start with Mr. Macdonell from Genworth.
You mentioned that the 80% threshold was consistent with other industrialized or, I assume, G-7 nations as a threshold for mortgage insurance. There was talk last week about why not 85%, or 90%, or 78%. This is in fact a number that would be consistent and therefore sensible to move toward, in your opinion?
4:40 p.m.
Senior Vice-President and General Counsel, Genworth Financial Canada
It is consistent with the two other largest mortgage insurance markets in the world, which are the United States and Australia. It provides a consistent viewpoint that is there for countries.
I mentioned earlier that any change to this requirement needs to be done slowly and be carefully watched. It has become an integral part of the financing system, so to move slowly on this would be a very cautious step, and a wise one to take. With the review coming up in another five years, it can be looked at again at that point.
4:40 p.m.
Conservative
Dean Del Mastro Conservative Peterborough, ON
Thank you. Actually, that was my next question. If we did this without proper due diligence and went too far, we could bring instability to a market that's quite stable right now.
4:40 p.m.
Senior Vice-President and General Counsel, Genworth Financial Canada
That is completely correct. The biggest concern in the research we had on this was that you could inadvertently disadvantage many consumers out there who had less than perfect credit, or perhaps lived in different regions of the country. That is really the kind of change that requires detailed study and consideration before any large changes are made.
4:40 p.m.
Conservative
Dean Del Mastro Conservative Peterborough, ON
Thank you.
Mr. Lawford, you made a couple of specific recommendations. You talked about a U.S.-style electronic transfer act and the need for a better framework for electronic payment.
I come from small business, and this is a big area of concern for small businesses. Money seems to disappear in cyberspace, sometimes for days, on the wiring of money, and then it reappears in bank accounts.
At a panel here last week I asked the Canadian Bankers Association whether they felt they were in a position where they could self-regulate this, because they're actually benefiting on both ends of this by dragging their feet. They're both charging interest on lines of credit and collecting interest--in many cases it may be a loan that they're forwarding the proceeds for.
In your opinion, do they have any interest in self-regulating this area?