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Rolling in massive profits again after taking billions in public bailout measures.
Ottawa (27 Aug. 2009) - Wouldn't you know it? Canada's chartered banks are piling up massive profits once again.
Less than a year after benefitting from Canada's version of a taxpayer-financed public bailout for bad loans and mortgages, the CIBC reported third quarter profits this week of $434 million, up $71 million from a year ago.
This follows the Bank of Montreal, which a day earlier announced that it made $557 million for the same quarter, up $36 million from the same quarter in 2008. And similar obscene profit numbers will no doubt follow from the other federally-chartered banks later this week.
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For Canadians who have lost jobs and pensions and watched their savings and investments evaporate in the economic meltdown, the instant return by the big banks to obscene profits is more than citizens should be asked to bear.
After all, it was the global banking industry that created the global financial and economic crisis with casino lending practices and then came crying to governments for a public bailout.
Something is definitely wrong when the big banks in Canada rack up such huge profits after accepting more than $100 billion under the bailout plan put in place by the Harper government to boost credit and financing.
Measures in the program included the following initiatives:
- Business Credit Availability Program
- Canadian Secured Credit Facility
- Insured Mortgage Purchase Program
- Canadian Lenders Assurance Facility
- Canadian Life Insurers Assurance Facility
In essence the Harper government used the borrowing power of Canadians to purchase risky mortgage securities held by the banks. To pay for this corporate welfare scheme – while it is denying Employment Insurance (EI) benefits to many victims of the economic meltdown – Ottawa will sell a combination of government bonds and other public debt instruments to raise the money. The total could hit $125 billion.
Meanwhile, the banks are making it tougher than ever for average Canadians by enforcing tougher requirements for loans and by often raising their loan rates and fees - despite historically low rates set by the Bank of Canada.
Although the Bank Rate now stands at a mere 0.25%, the banks have not passed the central rate reductions to individual Canadians and small business. Instead, they are hoarding cash and widening their profit spread. More shockingly, in some cases, the banks have actually raised rates on things like home equity lines of credit.
And during the current recession the big banks continue to gouge vulnerable families with sky-high credit card interest rates and ATM fees.
Why – during this devastating recession – is the Harper government sitting idly by while Canadians continue to get fleeced by big banks who are raking in huge profits?
As long as Harper and his cabinet let the big banks write the rules, we'll continue to have a financial system that's good for them and bad for everyone else.
NUPGE
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE
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