Finance Committee on June 15th, 2011

[Jane Pearse]

No.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Okay. The next question then is whether or not having these two in, if they're not following the same regulation, increases the liability to Canadians. Also, was either of these companies involved in the defaults in the U.S.?

[Jane Pearse]

We do not anticipate that there would be any change in liability. The companies are currently active within the Canadian marketplace pursuant to a contract with the government. As I said, this legislation is basically transforming that contract into a piece of legislation, so we're not anticipating that the playing field will be altered in any way.

One of the most important features of that framework is the qualifying criteria for the underlying mortgages. Both the private mortgage insurance companies and CMHC have been following a set of criteria established by the Minister of Finance for the last three or four years. We don't see that changing in this piece of legislation.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

The final question, of course, is this: was either of these companies involved with the defaults in the U.S.?

[Jane Pearse]

Genworth is Genworth Canada, so its parent is--

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Yes. Is it solely owned Canadian...?

[Ling Wang]

It has a parent company, which is a U.S. company, but it is a Canadian company that is listed on the Toronto Stock Exchange. It's regulated by the Office of the Superintendent of Financial Institutions.

The other active company, Canada Guaranty, was previously AIG, the Canadian subsidiary, but it has since been acquired by Canadian owners. It's a privately held company.

[The Chair, Conservative, James Rajotte]

Ms. Glover, do you have a brief question?

[Shelly Glover, Conservative, Saint Boniface, MB]

Thanks, Mr. Chair. I have two for clarification.

Ms. Nash brought up the 90% level. It is my understanding that the 90% level existed before now. Is that not correct?

[Jane Pearse]

Yes.

[Shelly Glover, Conservative, Saint Boniface, MB]

So that's not a change.

With regard to Mr. Marston's question, when we're talking about liability, what would be the consequence if we didn't proceed the way we are? Is there an alternative?

[Jane Pearse]

They are currently existing contracts, so if this legislation didn't move forward, the existing contracts would continue to live.

[Shelly Glover, Conservative, Saint Boniface, MB]

So whatever liability would exist, would exist anyway...?

[Jane Pearse]

That's right.

[Shelly Glover, Conservative, Saint Boniface, MB]

Very good.

Thank you.

[The Chair, Conservative, James Rajotte]

Ms. Sgro, please.

[Judy Sgro, Liberal, York West, ON]

How long have those two companies been interested in the same issue? Are there still only two or are there any others that have been interested in the issue?

[Jane Pearse]

Numbers of companies and permutations of companies have come in and out of the Canadian marketplace over the past 10 to 15 years. As Ling explained, what we currently call Canada Guaranty used to be AIG, and what is currently Genworth used to be the Mortgage Insurance Company of Canada. So there have been permutations, entrants, and exits, which speaks to the competitiveness of the market.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, colleagues.

I thank Ms. Pearse and Ms. Wang for answering our questions here today.

Colleagues, I will adjourn, but I will just let you know that we are meeting Monday morning at 10 a.m. We'll try to meet in this room, but watch for the notice.

Thanks, everyone. The meeting is adjourned.