Mr. Speaker, I appreciate having the opportunity to stand and support Bill C-100, an act to amend, enact and repeal certain laws relating to financial institutions.
This bill, which is essentially a housekeeping bill, has many good features in it. We are giving the Superintendent of Financial Institutions, an organization within the Government of Canada, the power and the capacity to have a much more specific accountability. This is not just in terms of protecting depositors' funds, but also in terms of making sure that the financial institutions are following all of those rules and regulations they are responsible for following which is the reason they got their franchise.
A bank is really not any different from a McDonald's franchise. The person who applies for a McDonald's franchise has to live by the rules and regulations of the administration granting the franchise. If that McDonald's franchiser is not following the rules, then as I am sure members have heard from people who have owned a franchise other than McDonald's such as Budget or Swiss Chalet, the management will say: "There are rules and regulations attached to the franchise that you have been allowed to operate. You are not following them and if you do not clean up your act, we
are going to pull the franchise. We will pull our agreement. We will take the franchise away from you".
Very few Canadians realize that the people of Canada through their trustees and agents in this House of Commons are the ones that grant the banking franchises which exist in Canada. The men and women in this room are the ones who design the rules and regulations that allow the banks to operate. The basic thrust behind that banking franchise is to protect depositors' funds but they are also to be in the business of lending money.
The banks, the franchisees, have done a pretty good job of those 7,000 little franchise operations across Canada, whether they be the Royal Bank or the Bank of Nova Scotia. They have done a pretty good job of protecting depositors' funds.
Where I have a problem is the way they have been handling their relationship with small business men and women. If I had my druthers and if I had had an opportunity, I would have added a couple of amendments to the bill. I would have liked a very specific responsibility given to the Superintendent of Financial Institutions on behalf of small business.
As the Superintendent of Financial Institutions goes through all the lists of responsibilities he has to maintain in his relationship with banks there is special mention for small business. I do not see it in here anywhere. On that score, I am disappointed. It does not take away of course from supporting the bill because there are a lot of good things in this bill.
Today I have the opportunity to stand on my feet in the House two years into our mandate. I have to say that our effort to sensitize this country's banks to become much more supportive of small business has not grown. That attitude change has not grown the way it should have grown.
I see my colleague, the industry critic from the Reform Party, who sits on the committee with me. He is nodding his head in approval that we really have not done as much as we should have done in committee.
I do not want to say that our efforts and the efforts of the banks have been a total failure. Two weeks ago there was a meeting of the industry committee. It was reported in a document that at the end of the second year there was an increase in the small business loan float. We were all very excited about getting that document. We saw that the loan float for all small business men and women in Canada was approximately $28 billion. That is the total of outstanding loans being utilized by small business men and women. That is a 1 per cent increase in the small business loan float over the last year.
Granted some people would argue that we are lucky it was not a decrease. However, when we consider the government's Small Business Loan Act guarantee, which is also included in that and the fact that the float increased, the real risk the banks have taken on behalf of small business men and women has not increased that much in the last two years. We are going to have to continue to press forward.
We hope eventually the banking culture, the men and women who operate the 7,000 bank franchises across Canada, in the not too distant future will be fully converted. We hope they will realize that the only way the economy is going to get back on the right track and men and women will get back to work is by making sure the small business community is given the maximum opportunity and the best environment in which to grow.
The Superintendent of Financial Institutions can play a major role in helping members of Parliament accomplish that policy directive. I am not talking about my policy directive here today; it is a policy directive of the Prime Minister of Canada. Make no mistake about it. Two months before the last national election campaign began the Prime Minister of Canada sat in the press gallery across the street from Parliament and said on coast to coast television that we were going to be the government that would really work to change the attitude of financial institutions toward small business men and women.
When I stand in the House today and support this bill and talk about access to capital for small business men and women, I am speaking on behalf of the Prime Minister and the Minister of Industry. In the last budget even the Minister of Finance said that we have to create new benchmarks for the banks in relation to the small business sector.
Those in the Office of the Superintendent of Financial Institutions who will take this bill after it has passed here today and later through the Senate are responsible for monitoring, reviewing and auditing small business activities. I plead with them to assist us in sensitizing those 7,000 branch managers, those franchise holders that small business must be very much a part of the language of the review, et cetera.
I want to move on to another aspect of the bill which I am pleased to see is addressed. It is on page 29 and deals with the whole business of derivatives.
It is no secret to anyone in the House that I have always been concerned about the private casinos the financial institutions in this country operate, the derivative sections in the banks. I see that this bill gives the Superintendent of Financial Institutions enhanced
authority to go into those derivative sections within the financial institutions and do thorough and complete audits.
I will be honest. I do not understand the complexity of the derivative game the banks are playing. I notice other members are nodding likewise. However, I trust that the expertise exists within the Office of the Superintendent of Financial Institutions. Some members are noting they are not convinced of that. I hope they are wrong. I will tell them why I hope they are wrong. I know of one financial institution in this country that in its derivative section, which I call the private casino, trades close to $30 billion a day. In one 24-hour period it trades $30 billion. This is an amazing amount of paper pushing, going back and forth. There are very small margins but with very big exposure.
If the essence of this bill, as my colleague from Dundas said earlier, is to make sure those depositors' funds are protected, then the Superintendent of Financial Institutions should start by making sure there is a good solid handle on all those private casinos, all those derivative sections in all the financial institutions.
Do members not wonder sometime how one bank can find $30 billion to play the derivative game in one day yet cannot seem to find the resources for the small business men and women who really require a small loan of $10,000 or $15,000 or $50,000? Am I losing it? Does anyone wonder about that sometimes? It is a totally different issue, but it has to do with will and attitude, which is the point I am trying to make.
If the board of directors or the senior management of a bank decides it is going to be in the derivative business and play with $30 billion a day, it happens. These guys work 24 hours a day, 7 days a week in these derivative sections of the bank. So if the management of a bank puts forward a policy that allows $30 billion a day to be pushed around the world by these unelected, unaccountable people who can affect the way our dollar goes and affect our interest rates, then why can we not get the same kind of will from the management of the banks to increase the float to small business by a little better than one per cent a year?
I noticed my colleague from the Reform Party, the industry critic, is saying that we can do it. We on this side of the House appreciate his consistent support as we deal with this issue.
This is a good bill because it gives the authority to the Superintendent of Financial Institutions to make sure that not only are depositors' funds protected in a more thorough way, but the whole administration of the bank franchises is followed according to the basic framework of the Bank Act. Alongside that responsibility, I would also ask them, as they go through their check list of responsibilities, to add another one: check and make sure that those 7,000 franchise holders of bank licences or bank charters across Canada are doing what they should be doing for small business.