Evidence of meeting #47 for Finance in the 41st 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.

On the agenda

MPs speaking

Also speaking

Jeremy Rudin  Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
Terry Campbell  President and Chief Executive Officer, Canadian Bankers Association
Frank Swedlove  President, Canadian Life and Health Insurance Association Inc.
Ursula Menke  Commissioner, Financial Consumer Agency of Canada
Philipe Sarrazin  Managing Director, Legislation and Policy Initiatives, Office of the Superintendent of Financial Institutions

4 p.m.

Conservative

The Chair Conservative James Rajotte

You have about 30 seconds.

4 p.m.

Conservative

Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC

In the last five-year review, did we have to increase it at that time? Is it typical that we have to increase it each time?

4 p.m.

Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance

Jeremy Rudin

Yes, indeed. So this threshold, which is going from $8 billion to $12 billion, was in the previous review raised from $5 billion to $8 billion.

4 p.m.

Conservative

Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC

Thank you.

4 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you, Mrs. McLeod.

Let's go over to Mr. Chisholm, please.

4 p.m.

NDP

Robert Chisholm NDP Dartmouth—Cole Harbour, NS

Thank you.

Minister, it's good to see you here before the committee again.

I have a couple of questions. I raised this in debate in the House, this business that we didn't have to bail out or assist our banks. In fact—and I'm not saying this to be critical, I'm just saying it to clarify—did the Canadian government not buy $60 billion to $70 billion worth of assets of the Canadian banks? That's a fair bit of support.

4 p.m.

Conservative

Ted Menzies Conservative Macleod, AB

You're right, we did, but they were good mortgages, they were solid mortgages, and they actually have been profitable. What we needed to do at the time--and I'm sure you recognize this, you'd have heard that in Nova Scotia--was the access to credit was what was the big challenge. The banks needed to free up some cash so they could help Canadians in the recovery.

So we took on some of those mortgages, good mortgages, and they've turned out to be profitable. It was a win-win. It provided extra credit to Canadians who were struggling to try to get credit at the time.

4 p.m.

NDP

Robert Chisholm NDP Dartmouth—Cole Harbour, NS

My only point in raising that is just to be clear that we've done well because of the regulation and the history and tradition of the way our banking system is regulated. But we weren't completely isolated from what was happening around the world. That's my only point.

4 p.m.

Conservative

Ted Menzies Conservative Macleod, AB

Nor do we now own a bank as the Government of Canada.

4 p.m.

NDP

Robert Chisholm NDP Dartmouth—Cole Harbour, NS

That's right.

I have a couple of things. One, I wanted to pursue a little further the foreign ownership question Mr. Brison asked about. It was a question I had as well. There are the concerns about it now going for ministerial approval and the concerns about why that's happening and the concerns about politicization.

I'm going to follow that up with a couple of short snappers.

Would you explain the removal of the restrictions on individuals cashing federal cheques under $1,500? We support that. I'm just curious as to what the rationale was behind it.

The last question I have is around the banking industry ombudsman and the concern that TD and RBC had pulled out of that system last year. What does that mean for the banking industry ombudsman system, and why wasn't it addressed in this bill?

4:05 p.m.

Conservative

Ted Menzies Conservative Macleod, AB

Thank you, Mr. Chisholm.

The issue on the foreign ownership was that our banks are looking at acquiring other institutions as well as other banks having subsidiaries in this country. And we need to make sure that we keep it Canadian, to put it very bluntly, that we don't end up with a wholly owned bank within this country.

I have no concerns with having political oversight, because the Office of the Superintendent of Financial Institutions still makes a recommendation that it go to the finance minister for final approval.

On the cheque cashing, I might ask Mr. Rudin to explain that one. I've never run into the situation where no one would cash my cheque, but I think it has happened.

The banking ombudsman is a good question. Frankly, we're concerned about this as well. Consumers need protection and they need, in this case, an ombudsperson who will hear their complaints and take that to negotiations with the bank, or at least explain it to the bank and hopefully receive an outcome that is agreeable to both parties.

4:05 p.m.

Conservative

The Chair Conservative James Rajotte

You have 30 seconds.

4:05 p.m.

Conservative

Ted Menzies Conservative Macleod, AB

We need to continue that and we're working towards making sure that whatever process is there, we are forcing banks to belong to a government-approved oversight ombudsperson.

I'll ask Mr. Rudin to just quickly answer your other question.

4:05 p.m.

NDP

Robert Chisholm NDP Dartmouth—Cole Harbour, NS

I think Mr. Rudin also had something to say about ministerial approval.

4:05 p.m.

Conservative

The Chair Conservative James Rajotte

Speak very briefly, because the member is over his time, unfortunately.

4:05 p.m.

Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance

Jeremy Rudin

That's fine. I don't have anything to add to what Minister Menzies said.

But I can explain on cheque-cashing that it's really just to clarify the existing provision. We've long had a provision that required banks to cash government-issued cheques up to a certain size. The way it had been written, one interpretation was that they had to do this for people who were not their own customers but didn't have the obligation to cash cheques for their own depositors. That's not the intent, so we clarify that any bank in Canada needs to cash a government-issued cheque for anyone who presents it, as long as it's for no more than $1,500.

4:05 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

We'll go to Mr. Adler, please.

March 8th, 2012 / 4:05 p.m.

Conservative

Mark Adler Conservative York Centre, ON

Thank you, Mr. Chair.

Minister, thank you so much for being here today. We really appreciate your presence.

You mentioned earlier that Prime Minister Cameron, right here in our own Parliament, spoke about how the Canadian financial system is a model for others around the world. I just want to cite a few others who have mentioned the same thing.

President Obama a couple of years ago said that in the midst of the enormous economic crisis Canada has shown itself to be a very good manager of the financial system and the economy in ways that the U.S. hasn't always been.

Ireland's Independent newspaper said recently that Ireland's financial regulatory system is due for a radical overhaul, with the Canadian system being held up as a role model.

Last week I was in Washington and had a number of meetings with various congressmen on both the House side and the Senate side. I guess The Washington Times must have known I was there, because I caught an article whose headline was, “America, home of the free. Canada, home of the future”. The first paragraph is, and I'll quote it: “Canada has strong banks, a stable real estate market and rock-bottom corporate tax rates, and it's about time Americans paid attention....” That was from The Washington Times last week.

I want to also say that throughout my meetings with members of the House and members of the Senate, the Canadian story is well known down in Washington, as you probably know. We are being looked at as a role model of how to craft a secure and stable financial regulatory system. It makes you feel proud, when you're down there and speaking to senior legislative officials of the United States government and they have that to say about our country's financial system.

Being from Toronto and from Ontario, I just want to ask you this. There are 400,000 jobs that are directly linked to the financial system; the job rate has grown 42% over the last ten years in the financial system; and 280,000 additional jobs are ancillary to the financial system. So clearly the financial system plays a key role in the economy of the province of Ontario, particularly in the city of Toronto.

Notwithstanding what we have here in Bill S-5, the government has taken a number of other steps along the way in the last number of years to further secure our financial system, in addition to what we see here in Bill S-5. Could you please talk about those?

4:10 p.m.

Conservative

Ted Menzies Conservative Macleod, AB

Thank you.

I share the comments that you make. It is not only in the United States; when I was in Europe before Christmas I heard the same thing from European bankers, saying that they would like to find a way to invest in Canada. I said, “Well, come on down. We'd be happy to have you.” It's a good model that we have put forward and a model that many other countries perhaps should emulate. I certainly appreciate that the Irish are having a struggle, but we'll support our motherland.

We've done a number of things to modernize our banking system: strengthening the authorities within the Canada Deposit Insurance Corporation—that is the fundamental protection for people's investments in the banking system—and there are a number of tools within Bill S-5.

Perhaps I could defer to one of my colleagues here or one of the people who know all of the background of some of the other pieces in the bill that are important to protecting the banking system.

Mr. Rudin.

4:10 p.m.

Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance

Jeremy Rudin

I'd be glad to respond.

Just to pick up on the other part of your question, the government has made a number of changes in recent years, which were referred to when Minister Flaherty put out the press release about all the activity. There were new business powers for the Bank of Canada to allow it to engage in a wider range of transactions. That turned out to be a useful change as the financial crisis deepened, as Minister Menzies was saying. There are additional authorities for the deposit insurer in two areas: one is to be better prepared to make good on deposit insurance in the unlikely event that it needs to be done; but also, the deposit insurer has wide-ranging responsibilities to manage a troubled deposit-taking institution, and all of that has been strengthened. Also, the Minister of Finance has additional authorities to conduct transactions to support financial stability, if those are needed, and indeed he took advantage of that during the financial crisis as well.

Specifically in the CDIC Act, in—

4:10 p.m.

Conservative

The Chair Conservative James Rajotte

Answer very briefly, sir.

4:10 p.m.

Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance

Jeremy Rudin

The changes to the CDIC Act really continue to improve that and deal with some technical issues that were raised in some of the earlier amendments.

4:10 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you, Mr. Adler.

Mr. Mai, it is your turn.

4:10 p.m.

NDP

Hoang Mai NDP Brossard—La Prairie, QC

Thank you, Mr. Chairman.

I would like to congratulate you on having your motion for financial literacy adopted by the House, among other things. We know that you are doing very good work.

4:10 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.