Evidence of meeting #13 for Finance in the 40th Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was banks.
A recording is available from Parliament.
Conservative
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
Thank you, Mr. Chair.
Mr. Siegel, in response to a question by Mr. Bernier, you said that EDC gave loan guarantees to forestry companies in Canada. Which companies benefit from EDC loan guarantees?
President & Chief Executive Officer, International Trade, Export Development Canada
Last year for EDC, of that $85 billion or $86 billion, $14 billion of that support went to the forestry sector and some 1,234 companies that we dealt with, with 12% growth.
As I said, that support was a combination of three things, primarily. One was receivables insurance. Their shipments are insured, and then the proceeds of that insurance, the actual claim proceeds of that insurance, are used to secure their banks. The banks lend to them partly against the strength of that insurance or securitized receivables that are insured by that. The insurance is a form of financing.
The second form of financing is our bonding. For companies that have to post performance bonds in order to ship abroad, particularly to emerging markets, their lines of credit are drawn down to issue those bonds, and we've stepped in and provided a guarantee to the bank to take them off risk.
Finally, we have provided direct financing as well. In fact, in the next week or so, you will probably see EDC's financing announced in respect of--
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
I suppose that you grant loan guarantees or loans to companies in accordance with international agreements, for example the softwood lumber agreement and NAFTA. I assume that the loan guarantees that you grant do not breach any international agreements.
President & Chief Executive Officer, International Trade, Export Development Canada
No. They're consistent with those agreements. In fact, even historically, when EDC stepped in on behalf of the government to provide a financing facility for early return of rebates, that was also done in a manner fully consistent with WTO obligations.
Conservative
Conservative
Daryl Kramp Conservative Prince Edward—Hastings, ON
Thank you. I'll just try to get a couple of quick questions in, if I may.
To Mr. Peters and Mr. Donner, I read with interest your position in a piece on ABCP in the Toronto Star on April 6. In one area, you said:
What is clear is that a consistent national set of regulations is required for Canada's so-called “shadow banking sector”.
Thus [the finance minister] should take this opportunity to set forth rules and create a [national securities] regulator....
I have two questions. First, I'd like you to comment on what you actually meant by the “shadow banking sector”. Can you give me a definition of that?
Canadian Centre for Policy Alternatives
I can try.
It would be defined as all of the financial institutions other than banks--i.e., trust companies, provincially regulated institutions, credit unions--that deal in financial transactions.
Conservative
Daryl Kramp Conservative Prince Edward—Hastings, ON
Thank you.
Are you still of the opinion that we do need a common securities regulator?
Canadian Centre for Policy Alternatives
Absolutely.
I worked on that when I was a minister. I didn't get anywhere. I would wish the finance minister luck in his attempts to deal with that.
Conservative
Daryl Kramp Conservative Prince Edward—Hastings, ON
Third, you mentioned that the bank, now that we've basically hit the bottom with regard to base rates, should consider other moves, other opportunities under other vehicles, such as quantitative easing. You said that this might require further measures by Parliament.
What do you see as steps in those further measures?
Canadian Centre for Policy Alternatives
If there are any additional measures needed to help the Bank of Canada in that area, then I think the bank should bring that up to Parliament. But most of the items that are needed are already there.
I believe the quote from the Bank of Canada Act goes something along the lines of, “In extreme circumstances, the bank can do virtually anything”. I think probably we would define the present time as extreme circumstances. I don't think there would be--
Conservative
Daryl Kramp Conservative Prince Edward—Hastings, ON
Thank you.
Ms. Dickson, we seem to have a bit of a circle that's not squared here. I'll relate this to the auto industry, the banking sector, and financing.
We have the bank rates, our base rates, going down, yet the dealer lines are increasing. At the same time, we have a significant infusion of capital going into the banks to support them so that it wouldn't be possible.
Something's not jibing. The impression, the perception, is that the banks are ripping them off.
What's the real deal?
Superintendent, Office of the Superintendent of Financial Institutions Canada
The decision to lend is a private sector decision. The rates that are decided upon in making those decisions are also private sector decisions.
We'll only know after the fact whether the rates are too high.
Conservative
The Chair Conservative James Rajotte
Thank you.
If you want, Mr. Thibeault, you can have a couple of minutes--very quickly.
NDP
Glenn Thibeault NDP Sudbury, ON
Thank you. I'll be very brief.
To Ms. Dickson, do we need a pension guarantee fund, in your opinion?
Superintendent, Office of the Superintendent of Financial Institutions Canada
That's really a question for the government.
Conservative
