Industry committee  I think you said it all; it's simply the sequence of events. The first thing that happened was this financial market turmoil, and that's what really increased the cost of funds, because financial institutions were in fact very risky at that time. We saw a lot of big players failing and at risk of failing.

Industry committee  Generally, when we're thinking in those terms, we're looking at the balance sheets of firms. We find that the debt-to-equity ratios are much healthier than they have been in the past. That's true of small businesses as well as of large businesses, generally. Also, when we look at the data we have on lending to smaller businesses, we find that over the last few years what they've been doing is making sure they have access to credit, but they haven't really been drawing down on it.

Industry committee  I would just add, if you want to get a sense as to the appetite of banks to make business loans, look back to the fall of 2008 when there was the greatest financial turmoil that we've seen. That was actually when bank business lending accelerated at the most rapid rate it has in a number of years.

Fisheries committee  I'll answer the second question and leave it to my colleagues to answer the first and third. Let's look at the cost of credit and that cost in relation to the Bank of Canada benchmark. The Bank of Canada benchmark, since its peak in the fall of 2007, has fallen by 425 basis points.

Fisheries committee  Let me answer that by talking about the things the industry has been doing with the government, both individually and collectively, through the CBA. The government announced a number of extraordinary financing frameworks in the previous budget, including the BCAP. We've been working within the CBA with our members, the Department of Finance, and the crown financials to understand how they want us to report our initiatives, how we are working with the various crown corporations, and how we report those initiatives to the government for its own quarterly reporting.

Fisheries committee  In fact, Mr. Chairman, the market share of the banks in the last six years or so has actually increased a little bit. We have been growing our business credit faster than others in the marketplace. And those others are credit unions, caisses populaires, life insurance companies, unregulated financial institutions, the capital markets in general--the equity markets and the bond markets.

Fisheries committee  It enhanced competition in the marketplace, and as they came in they saw opportunities. They wanted to get some market share, and they did what they had to do to get market share. I think we think it's a good thing that the government opened up the doors to easier entry by foreign institutions to serve the marketplace.

Fisheries committee  I think the entry of the Icelandic banks into the Canadian market is a reflection of the changes in the Bank Act that occurred in the last round, where the federal government made it easier for foreign institutions, foreign banks, to set up shop in Canada. Previously, they could only set up shop by establishing a separate commercial entity, a subsidiary.

Fisheries committee  Thank you, Mr. Chair. Good morning. My colleagues with me are Peter Conrod from RBC, Steve Murphy and Paul Seipp from BMO, and Craig Thompson from the Bank of Nova Scotia. In the interest of time, I will be reading a shortened version of the opening remarks that I left with you.

Agriculture committee  In addition to what has been happening in the financial markets--and we all know there has been quite a bit of turmoil there--in the last two quarters we've now entered into one of the more serious recessions that people can remember. From the banking side, I know that provisions for credit losses have been increased quite substantially.

Agriculture committee  I think that's a question better directed towards my members, and I will start with Bob Funk.

Agriculture committee  Thank you, Mr. Chairman. The CBA appeared before a joint session of the House finance committee and industry committee on precisely this issue and brought some members with them to discuss our position on that. I think what we said there is reflective of the CBA's and the industry's position.

Agriculture committee  Well, I indicated that we have these general principles that we think should guide crown financials' behaviour in the marketplace. For example, there should be a well-defined public policy mandate and they should provide incremental financing. They should provide niche financing.

Agriculture committee  I believe the interest rate in question was addressed to the banking sector. Again, let me try to put it in context. Since its peak in the fall of 2007, the Bank of Canada benchmark rate has declined by 425 basis points. The bank's prime rate has declined by 400 basis points. That's about 95% of the Bank of Canada decline.

Agriculture committee  Thank you, Mr. Chairman. To put it in context, the kinds of principles we would like to see that govern federal crown corporations like FCC are the ones that have been very well espoused in the current extraordinary financing framework the government announced in its previous budget.