Mr. Chair, I am having difficulty believing that the NDP is serious about putting a cap on five points over prime. In physics, there is a law that for every action there is an equal and opposite reaction. It applies somewhat in financial circles as well.
If in fact we put that cap on and I were a financial institution, which I am not, I would immediately readjust my strategy. I would adjust my strategy to simply pick up the most creditworthy customers because I could no longer afford delinquency and all of the difficulties that come with collecting from less creditworthy customers. I would probably have to scale back the services that I provide because presently there is a 24/7 worldwide system and whether I would be able to continue to provide that would be problematic. Canada has probably the most sophisticated financial system in the world. I would have to scale back some measure of that.
If I were a financial institution, I would have to look very seriously at where I would be getting my revenues. Presumably, I would still get my revenue from the merchants. I would presumably still get some of my fees, although I would not get nearly as many fees as I was getting before, and I would not be able to count on revenues that might be generated from interest.
The equal and opposite reaction would be exactly the opposite of what the hon. member wants. There would be a restriction of credit. There would be fewer reputable institutions in the business. She would effectively create a new pool of people who have to deal with fringe financial institutions and their cost of operating is quite a bit higher. She would have the unintended consequence of actually creating a larger pool of people dealing with fringe financial institutions, paying higher rates of interest, and in fact not doing what she proposes doing. I put it to the hon. member that she cannot possibly be serious about a 5% cap.