Madam Speaker, I am pleased to take part in the debate on Bill C-229. I begin by congratulating the member for Hochelaga—Maisonneuve on his persistence. Initially Bill C-229 was Bill C-289 and then Bill C-428.
The bill amends the Bank Act. It provides that certain branches of a bank must take measures to facilitate access to credit to persons who have a residence or a place of business located in an electoral district where the monthly unemployment rate as established by Statistics Canada has been on at least one occasion during the preceding calendar year equal to or higher than the national average.
Furthermore, the bill provides that certain banks must pay 5% of their profits in certain years into a special fund that would be used to lend to people in districts that qualify.
Also, it provides that certain bank representatives under threat of a $50,000 fine must meet with community representatives to discuss implementation measures adopted or associated with community investment.
As well, certain banks are to keep statistics on to whom they lend money and they are to prepare an annual report providing information relating to the community reinvestment initiative. In other words, there are requirements on how the banks operate if these amendments are made to the Bank Act.
Equity in community banking is very important. Reinvestment in the community certainly does help attain the balance needed between local residents and their banks. It is important for financial institutions to meet the local community's credit needs in the form of loans granted to individuals, businesses and community organizations.
The principles espoused by the bill are indeed laudable. The overall goal of achieving equity through community reinvestment by encouraging banks to grant loans to persons living in areas having above average unemployment, by studying the loans granted under the act through a reporting system and showing support to small borrowers within the community is a commendable goal to aspire to.
As previously mentioned, making credit more readily available to areas that for one reason or another may be disadvantaged at a particular time is certainly a worthy cause. This is indeed what the U.S. did when it passed the community reinvestment act.
It is also worthy to note that in the housing sector, the U.S. saw improvements. Since 1993 mortgage loans to Afro-Americans have gone up 47.5%. Mortgages granted to Hispanics have gone up 36%. Mortgages given to low to mid-income earners have risen 22%. These are all excellent statistics.
However, one must be careful before adopting any type of wholesale changes to the Canadian legal system and regime. This is what the bill does. It seeks a U.S. style approach to achieve community equity reinvestment by adopting the U.S. community reinvestment act. Sometimes U.S. style reforms may be good or even welcomed, but one must be cautious of exactly what reforms Canadian amendments attempt to adopt.
As noted, the bill is modelled after the U.S. community reinvestment act. However, the community reinvestment act really is an omnibus bill. A major portion of the U.S. bill that brought in the community reinvestment act also amended the housing and community development act of 1974. Perhaps more important, it extended the urban homes program. The United States at the time was suffering from a substantial crisis in urban decay.
Jointly, the community reinvestment act, the housing and community development act and the urban housing program all combined to produce the increased mortgage numbers.
Obtaining statistics like that is something that can be aspired to, but all the legislative tools have to be in place, not just one or two of them.
When we bake a cake we need all the ingredients. We cannot leave out the flour or the sugar and expect the cake to look like the baker's down the street. However, Bill C-229 in proposing the amendment to the Bank Act may not produce the intended results that were indeed attained in the U.S. because it has left out some of the ingredients.
The real estate and financial service sectors in Canada are vastly different from those in the U.S. The regime involved in the chartering of banks is different. The real estate industry is different. There are different players involved in Canada.
I realize that this amendment is not votable, however, if it were, the proposed legislation would need a little more work done to it. For instance, the legislation would have to be explicit if it was intended to facilitate just business growth or would homeownership through mortgages like the U.S. also be targeted? If granting mortgages was an intended result, then obviously the Canada Mortgage and Housing Corporation would play a role.
Leaving the mortgage aspect aside, I note that this is the third time the bill has been before the House. As I mentioned earlier, it has a very good goal in mind. However, if it comes to the House a fourth time, there may be some utility in dissecting not only the U.S. community reinvestment act, but also the housing and community development act and the urban housing program to see if any of the provisions found there might be helpful to Canada.
Finally, there are two brief comments that should be made about the bill as a whole. First, in a time when governments should be trying to reduce regulatory red tape and bureaucratic stifling, the bill seems to add a few more components to the already highly regulated banking sector. Meetings must occur and reports must be written with 13 or more components by bank representatives. These reports must be given to the superintendent. The superintendent must give the reports to the minister. The minister must lay the reports before each House of Parliament.
Sometimes reports and meetings are not needed but it is not to say reports would not be needed in these types of situations if this bill were ever passed. However, if legislation of this type were ever votable, then care must be taken to ensure that the statutorily dictated meetings and reports were properly administered.
The last point deals with the offences and penalties section under subsection 627.16 and 627.17.
If requested, the branch of a bank must meet with community representatives who have requested a consultation concerning the assistance the bank is giving to community reinvestment and any implementation measures developed or undertaken by the bank to achieve that reinvestment.
Paragraph 627.16(2) says that any person, and it is assumed that any person means the bank even though it does not say so explicitly, who does not meet, if requested, is liable to a fine not exceeding $50,000. Also, banks could receive $5,000 fines if they do not comply with the reporting requirements. Yet if the banks violate subsection 627.4, which states that the bank shall implement equity community reinvestment, no offence will have been committed.
Therefore, at the end of the day we have this legislation that statutorily directs meetings with community representatives and directs that reports must be written outlining the banks reinvestment strategy, both under threat of substantial fines. However there is no obligation for the banks to actually implement community reinvestment. There is a $5,000 fine for not writing the report that says they did not undertake any community reinvestment measures.
In closing, this might not be the most helpful way to ensure that community reinvestment gets accomplished. As stated before, the goals of the bill are commendable but the drafters have not reasoned it out to the point where it could be seriously adopted in the House.