Evidence of meeting #46 for Public Accounts in the 40th Parliament, 3rd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was institutions.
A recording is available from Parliament.
President and Chief Executive Officer, Canada Deposit Insurance Corporation
Yes. There are trust and loan companies that take deposits.
President and Chief Executive Officer, Canada Deposit Insurance Corporation
No.
President and Chief Executive Officer, Canada Deposit Insurance Corporation
No.
Bloc
Meili Faille Bloc Vaudreuil—Soulanges, QC
I have two questions.
A report in a financial paper—I don't have the name of the paper—indicated that junk bonds in pension plans were now at an all time high and that people seemed to be avoiding government bonds. Is there someone looking into what is happening with junk bonds?
General Director, Financial Sector Policy Branch, Department of Finance
Private pension plan regulations are under shared jurisdiction in Canada. And federal jurisdiction is quite narrow. We are only responsible for private pension plans when the employer is under federal jurisdiction, such as banks, the transportation sector and sectors like that. Regulations mostly fall under provincial jurisdiction. Provinces issue their own regulations.
Bloc
Meili Faille Bloc Vaudreuil—Soulanges, QC
Do we find these types of products in public pension plans and, if so, what is the percentage?
General Director, Financial Sector Policy Branch, Department of Finance
I don't have that information with me.
Bloc
Assistant Superintendent, Corporate Services Sector, Office of the Superintendent of Financial Institutions
When you say “public pension plans”, can I ask which ones you're referring to?
Assistant Superintendent, Corporate Services Sector, Office of the Superintendent of Financial Institutions
Actually, we do have an office associated with our office, the Office of the Chief Actuary, which provides the actuarial oversight to those pension plans.
Bloc
Meili Faille Bloc Vaudreuil—Soulanges, QC
Okay. So we should contact the office if we want to find out the percentage that is invested in junk bonds.
Assistant Superintendent, Corporate Services Sector, Office of the Superintendent of Financial Institutions
I'm hesitating because I'm not sure if he could answer that question. We can find out.
Bloc
Meili Faille Bloc Vaudreuil—Soulanges, QC
You will tell us. Okay.
Here is the second question that the notaries in my constituency asked me. Mortgage transactions are also carried out by the Business Development Bank of Canada. How does the government choose the people who are able to conduct mortgage transactions for the Business Development Bank of Canada?
General Director, Financial Sector Policy Branch, Department of Finance
The Business Development Bank of Canada is the responsibility of the Minister of Industry. I'm sorry, but that's not our area.
Bloc
Meili Faille Bloc Vaudreuil—Soulanges, QC
It's not your responsibility. Okay.
Those were the simple questions I had.
Liberal
The Chair Liberal Joe Volpe
I have just one question, if I might. Perhaps, Mr. Horgan, you're the one to best answer it.
As Canadians, we've all lived through this cycle where the major bulwarks of healthy economies have been perceived to be the banks, and especially the very large international banks primarily resident in the United States, because that's the area we follow. We don't follow the ones in Europe or in Asia all that much. Yet over the course of the last several years, there was a movement in our economy to try to emulate the financial practices of the Americans. I don't think I'm exaggerating if I suggest perhaps that's not proven to be the great lighthouse that it used to be.
What would cause us to move away from something that you've described and the Auditor General has described as something very, very sound? What would cause us to move away from a very small-c conservative banking system, which provided stability and continuity, to one that would emulate a system that virtually collapsed some three years ago? What would be your SAC's advice in that regard? You did initiate some changes that almost led us down the same path.
Deputy Minister, Department of Finance
I think it is probably true to say that there were a lot of people who were putting pressure on for changes. I don't think any of the changes that were introduced in Canada really led us down that path. Indeed, probably from a regulatory supervisory point of view, and indeed from many of the banks' and financial institutions' points of view.... They're pretty conservative organizations and did not go down that path for prudential reasons.
Liberal
The Chair Liberal Joe Volpe
But you laid the groundwork for them, and should they have chosen, would they have been able to? You changed the regulatory system somewhat.
Deputy Minister, Department of Finance
Yes, but I don't think in ways that fundamentally changed the Canadian system. I think there were probably pressures to move beyond where we went. I think now with the financial crisis, there's even less motivation to even consider those things. I think perhaps we've learned a lesson in Canada, and maybe others have learned a lesson from Canada, that a fairly kind of conservative, prudential system seems to pay off, as opposed to some of the more...I don't know quite what the right word is, but some of the ways—
