Finance committee  Thank you. Good evening, Mr. Chair and distinguished members of the committee. Thank you for the opportunity to share with you the perspective of credit unions so that it may receive consideration in the committee's report. Before I begin, some of you may not yet be familiar with the recent change in the credit union system.

Finance committee  For the—

Finance committee  Unlike banks, credit unions lend out capital. They raise their capital through retained earnings. Banks raise capital through the public markets. When they need money, they go to the markets; they raise capital. There are two things at play here. The credit unions, as with all financial institutions regulated in Canada, need to raise more capital in order to meet a higher regulatory standard.

Finance committee  Well, if they're not able to lend because they're running up against their capital requirements, then it's the consumers who are not—

Finance committee  There's no money to lend to them.

Finance committee  In some areas like Manitoba and Saskatchewan, half of the lending to small business is from credit unions. They're very important lenders to the mid-market, the smaller market across Canada, but particularly where they're stronger is in the western provinces. It would make more money available to be lent for mortgages, for small businesses, for families, that kind of thing, which is the market in which credit unions primarily operate.

Finance committee  Right. Yes, it's different.

Finance committee  Yes.

Finance committee  It's different.

Finance committee  What expired was a tax credit. This is a credit on growing capital. It's on the growth of capital. It's a different model of credit.

Finance committee  I would say that credit unions are working hard to try to help in communities where they have those other organizations. There's some work that's been done in Vancouver. Vancity has a similar kind of short-term loan structure that has worked out fairly well. Ontario announced recently that they're working with the provincial government to work on payday loan types of organizations.

Finance committee  Thank you, Mr. Chair, and thank you, committee members. I'm here with my colleague, Rob Martin, representing Canada's credit unions. Credit unions, as you know, are member-owned, full-service banking institutions that serve over 5.6 million Canadians. We contribute $6.5 billion to our country's GDP and help create over 58,000 jobs.

Finance committee  We have pointed this out to the government. I think the government's view is that it has signed an agreement at the level of the OECD, and it's abiding by that agreement. I think there is the opportunity to look at how it's implemented in Canada and to look at a risk-based approach in the implementation.

Finance committee  This is new news. It was announced last week, as you know. We're in the process of modelling some accurate data, which we will share with the committee and with you when we get it done. But suffice it to say that credit unions securitize mortgages as a way to raise capital. The ability to securitize mortgages under this approach will be constrained, and therefore so will our ability to raise capital.

Finance committee  Yes. FATCA applies to the U.S. This new measure applies to OECD countries, so to a much larger number of countries.