That's a good question. To be honest with you, I can't tell you what the effect would be on the Canadian financial institutions. There is a global economic worry, I think, that money generally will flow to the U.S. in a hunger for increased returns.
Capital, as we all know, is very excited about the idea of finding new ways of repackaging some of what were called the “toxic assets”. The whole fiasco of repackaging those toxic assets was in essence what motivated the Dodd-Frank to come in: to prevent that kind of creative packaging. My worry is on a global scale: that in fact we will start to see capital move from some of these real estate assets into these kinds of potentially lucrative financial returns. We can see this in the worries about the housing crisis today, and we can see this in other places where there is fear of bubbles percolating in different housing markets.
The worry should be more on a global scale. I'm not saying that the repealing of Dodd-Frank is going to usher in other international financial crises, because there are some new safeguards that have been put in at the international level, at the Bank for International Settlements level and in the Basel III accord. There's a lot of good stuff going on internationally to prevent some of the same things happening, but there is what we in international public economics call a “casino capitalism” kind of view of the world right now, whereby there is a hunger.
You couldn't find any more excited people than those who are on Wall Street today, who see that in fact they may just see a return of exactly the same conditions of 2006 and 2007, which, again, looked very similar to what we have now, that is, really high real estate prices, an extension in the mortgage market and a lot of people who shouldn't have mortgages having mortgages, and all of the same sort of global hunger for high returns—that frankly aren't coming from other markets—rushing into the United States.
There are these sorts of global factors that worry me. It's the global aspect that I think could have a negative potential for the Canadian banking industry specifically.