Neil—
Evidence of meeting #18 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was businesses.
A recording is available from Parliament.
Evidence of meeting #18 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was businesses.
A recording is available from Parliament.
4:45 p.m.
President and Chief Executive Officer, Canadian Credit Union Association
It's Martha.
4:45 p.m.
President and Chief Executive Officer, Canadian Credit Union Association
In many cases, many of our credit unions said they would front the money for the CEBA program even while thinking that they weren't going to be part of it, because their members, their small businesses, really needed access to those programs. I know that Sunshine Coast Credit Union—on the Sunshine Coast—was fronting the money, even though they didn't think at the time that they'd be part of the program. Now that they are, you will see much more of that across the country. They'll be able to onboard their credit unions just as as we are able to onboard them into this program.
4:45 p.m.
President and Chief Executive Officer, Canadian Bankers Association
Yes, of course.
I think that would be an enormous challenge. The wage subsidy program is about a $70-billion program. To front that would be challenging, even in the short term, as a bridge into May. With that said, I do think CEBA does provide an opportunity to provide that bridge until the wage subsidy comes in. If you couple that with other small business credit and loan facilities, there are options.
I mentioned in my speaking remarks, for instance, that the authorized lending to small and medium-sized enterprises was $247 billion as of September. Of course, that's the authorized amount. The actual loans outstanding are $156 billion, so the delta of $91 billion that's already pre-approved as an existing line of credit that small and medium enterprises can draw down on is another opportunity for small and medium sized businesses to bridge them to the wage subsidy.
4:50 p.m.
Liberal
The Chair Liberal Wayne Easter
Okay. Thank you all. We're a little over time on that one.
We will go to Mr. Morantz, and then Mr. Fragiskatos will have to wrap it up.
4:50 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Thank you, Mr. Chair.
Mr. Parmenter, I want to talk to you about an issue we haven't really touched on.
I recall that back in the 2008 crisis, major financial institutions in the United States were literally collapsing overnight. The term “too big to fail” was bandied about. This crisis seems to be, from an economic perspective, a far bigger problem than even 2008 may have been.
I don't want to make any assumptions about the banks' ability to weather these financial storms. I think it's important for everyone to remember that bank profitability is fundamentally important for the millions upon millions of Canadians who own bank stock or rely on bank stock dividends, not just personally but through pension plans like the Canada Pension Plan and large private pension plans.
I wonder if you can comment on whether there's any concern among the CEOs of the big banks as to the economic viability or stability of our banking system over the next number of months.
4:50 p.m.
President and Chief Executive Officer, Canadian Bankers Association
I'm very familiar with the global financial crisis of 2007-2010. I happened to be working for a major Canadian bank in the United States at that time, so I had a front-row seat to those challenges.
In essence there are several big differences, obviously, between the two. The crisis of 2007-2010 was more a story of global financial economic disruption that affected the broader economy, whether it was housing or other industries. In this instance, it's almost the reverse.
In a typical recession you'd have months to a year to explore different policy alternatives and make moves to respond to changing economic conditions. In some instances now, we saw the change come abruptly, in some cases literally overnight, when revenues went to zero for certain businesses, so there are a lot of dramatic differences.
To respond to the core of your question, Canada is blessed not only in having the incredibly strong banking sector I spoke to during my opening remarks, but also because Canada is world-renowned when it comes to prudential regulations. Our prudential regulator in OSFI, Superintendent Jeremy Rudin is world-renowned for being one of the best prudential regulators in the world, and that kind of dialogue between major banks and OSFI to look at rapidly changing economic conditions and ensure the financial sector remains sound and stable has an eye to two things. There's an emergency need we're in the middle of right now, which is to provide immediate relief for people, but we also need to ensure that as we start to come out of this crisis, we have a strong, stable financial sector so that businesses can come back and businesses can grow once again.
Your point is a critical one, and I think it is a key issue that doesn't get talked about a lot: There's an immediate emergency need, but there's also a need to have a longer-term view as to how Canada is going to come out of this crisis.
4:50 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Thank you.
I wanted to circle over to the credit unions for a second if I have...Mr. Chair?
4:50 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Currently if you're a rural business that's been banking with a credit union, can you go to your local credit union and make an application for the CERB, or do you actually have to go to one of the banks, where you may not have any relationship at all?
4:50 p.m.
President and Chief Executive Officer, Canadian Credit Union Association
Thank you for the question. Are you referring to the—
4:55 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Sorry. It's not the CERB. I meant the CEBA. My apologies.
4:55 p.m.
President and Chief Executive Officer, Canadian Credit Union Association
Yes. The CEBA is designed such that you need to go with your primary financial institution, which is why it's so important that all financial institutions, credit unions included, have access to the program. If your primary financial institution is a credit union, you need to go to them first—not even first: You need to go them in order to access the program.
It is important, because they do not have the option of just walking across the street and going to another financial institution to access that program.
4:55 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Is it available, though? That's my question.
4:55 p.m.
Vice-President, Government Relations, Canadian Credit Union Association
It will be, yes. Based on the announcement and the assurances that we received this morning from Finance Canada and EDC, yes, all credit unions will be able to deliver CEBA to their members.
4:55 p.m.
Liberal
The Chair Liberal Wayne Easter
For the benefit of the translators, I believe that was Michael Hatch.
4:55 p.m.
Vice-President, Government Relations, Canadian Credit Union Association
Yes, thank you, Mr. Chair. This is Michael Hatch from CCUA.
4:55 p.m.
Liberal
The Chair Liberal Wayne Easter
Thank you.
Just on Mr. Morantz's questions, there's a new language here: CEBA, CERB and CEWS. It's a language we didn't even know a month ago, so I can understand that people are missing the acronyms.
Mr. Fragiskatos, you'll wrap it up. We'll give you five minutes.
4:55 p.m.
Liberal
Peter Fragiskatos Liberal London North Centre, ON
Thanks, Mr. Chair, and thank you to the witnesses.
This question is for Mr. Parmenter and Ms. Durdin.
Victor Dodig, the chief executive officer of CIBC, as you well know, recently said that COVID-19 will have a more profound effect on the world than the attacks of September 11. First, do you agree with that sentiment? Second, if you do agree, what does that mean? What does it imply? What are the overall implications for banks, going forward, and for credit unions?
4:55 p.m.
President and Chief Executive Officer, Canadian Bankers Association
I must apologize. I've been trying to read and digest as much news as I possibly can and I've seen a few interviews with Mr. Dodig, but I'm unfamiliar with that one. I would certainly agree with it from an economic impact standpoint. Undeniably it has, in a global way, changed the world economy, and done it at absolutely unprecedented scope and speed, so from that perspective I think it's undeniable. I just don't know whether he was talking about something other than the whole economic impact of it to the world.
4:55 p.m.
Liberal
Peter Fragiskatos Liberal London North Centre, ON
Yes, I guess I should have clarified that he was speaking specifically about the global economy.
4:55 p.m.
President and Chief Executive Officer, Canadian Bankers Association
With regard to an overall global impact in terms of size and speed and scope, it's hard to deny that statement, for the reasons I've just described. Yes, there were impacts beyond the United States in 9/11. Certainly that economic impact was felt globally, but I think this one has moved at unbelievable pace in short order, and it is changing our lives more directly day to day than 9/11 did. It's a new normal that we're all living under. I'm talking to you from my kitchen island, and I'm not used to doing that. It's hard to deny the overall impact.
4:55 p.m.
Liberal
The Chair Liberal Wayne Easter
Again, there's some background noise there. I hear some kids. I will ask people to please mute their mikes.
Go ahead. Did you want Martha to answer that question too?