Too big to prosecute, our bankers

[admin]

Canada's biggest banks accepted tens of billions in government funds during the recession, according to a report released today by the Canadian Centre for Policy Alternatives. http://www.policyalternatives.ca/

video [url] http://www.youtube.com/watch?v=9K_N0uOX ... JBa_l0w7AQ
[/url]
Canada's banking system is often lauded for being one of the world's safest. But an analysis by CCPA senior economist David Macdonald concluded that Canada's major lenders were in a far worse position during the downturn than previously believed.

Macdonald examined data provided by the Canada Mortgage and Housing Corporation, the Office of the Superintendent of Financial Institutions and the big banks themselves for his report published Monday.

It says support for Canadian banks from various agencies reached $114 billion at its peak. That works out to $3,400 for every man, woman and child in Canada, and also to seven per cent of Canada's gross domestic product in 2009.

The figure is also 10 times the amount Canadian taxpayers spent on the auto industry in 2009.

"At some point during the crisis, three of Canada's banks — CIBC, BMO, and Scotiabank — were completely under water, with government support exceeding the market value of the company," Macdonald said.

"Without government supports to fall back on, Canadian banks would have been in serious trouble."

During October 2008 and June 2010, the banks combined to report $27 billion in profits on their balance sheets.

CMHC mortgage program aided banks
One of the most well-known ways in which policymakers helped the banks during the crisis is through a $69-billion CMHC program whereby the housing agency took mortgages off the balance sheets of big Canadian banks. In contrast with other support facilities, all of the funds granted by the CMHC were through selling assets (in this case mortgages) to the housing agency. They were not funds that had to be paid back.

The CMHC has provided the aggregate total of how much was given out, but has yet to release specifics on which banks sold how much to them, and when, the CCPA says.

When asked for comment in reaction to the CCPA report, the Canadian Bankers Association noted that the $69 billion that Canada's big banks sold into the CMHC program is in fact only 55 per cent of what was allocated for the program.

"Many of the mortgages were already insured and therefore, created no additional risk for the government," the CBA noted in an email to CBC News. The CMHC estimates that by the time the program is wound up, it will have generated $2.5 billion in profit as those mortgages are paid off, the bankers' group noted.

Calling the CCPA report "completely baseless," Department of Finance spokesperson Chisholm Pothier noted that the mortgage program has already generated more than $1.2 billion in net revenues for the CMHC's coffers.

But Canadian lenders also dipped into a program set up by the U.S. Federal Reserve aimed at providing cash to keep American banks afloat. CIBC and BMO took almost $3 billion each out of the fund, RBC and TD took out $8 billion and Scotiabank drew down almost $12 billion, the CCPA report found.

'These funding measures were not put in place because banks were in financial difficulty.'
—Canadian Bankers' Association
That data came from the U.S. Federal Reserve, which released it publicly. But Macdonald's analysis found that Canadian banks got a comparable amount — $41 billion — from Bank of Canada facilities, an agency that has been far less transparent in sharing information.

"Despite Access to Information requests for the data, the Bank of Canada refuses to release it," the CCPA report states.

"The federal government claims it was offering the banks 'liquidity support,' but it looks an awful lot like a bailout to me," says Macdonald. "Whatever you call it, Canadian government aid for the country's biggest banks was far more indispensable than the official line would suggest.


(advocate comment: it appears, after much observation, that bankers and politicians have a rather incestuous relationship, whereby they both manage to benefit each other, at the direct expense of the public. I trust that this will reveal itself in ways that illustrate a criminal breach of the public trust, and that one day we will advance our society and our legal (and political) system to a point where financially abusing the public is no longer "tolerated". I could be wrong, for sure I am misguided in my thinking. But one has to hope)

http://www.policyalternatives.ca/

[admin]

"A nation that is afraid to let its people judge the truth and falsehood in an open market is a nation that is afraid of its people."
John F. Kennedy

............and of course any government that lies, cheats and betrays its people has to be very afraid and potentially violent when threatened.

Canada spends $6 billion on overall police , $511 million on CSIS (secret police) and only $16 million (only three, one thousandths as much as spent on ordinary police) on the RCMP IMET major economic crimes unit. It wants to catch YOU, it just does not want anyone to catch or even look at THEM and their top friends.

Despite figures that suggest that financial crime by trusted criminals is equal to or larger than the damages done by each and every other crime in the country combined.

Police spending figures from Justice Canada and Stats Canada web sites , Parl.gc.ca and annual reports from CSIS and RCMP

[admin]

No Canadian bank bailouts? Says who?

10 December 2009
Institutional brokerage staff at Canada’s bank-owned investment dealers are in line for a record payday this month. And I see in my morning DTM offering that one of the justifications of this largess is that the public pursue was not used to keep our large financial institutions afloat during the recent global financial crisis, unlike the USA or United Kingdom:

Government officials noted yesterday that the situation in Canada is very different from that in Britain, adding there was no need for a bank bailout here.

It is a matter of some national honour that Canada’s bank’s didn’t receive direct capital injections from the government. That much is true.

But what isn’t true is that the banks survived the past twelve months without extradordinary financial support from the federal government and the Bank of Canada.

Between September 2008 and March 2009, Canadian banks reduced their holdings of domestic residential mortgages from $486.1 billion to $434.9 billion according to Bank of Canada stats; on a net basis.

Where did those mortgages go, you ask? Did 10% of Canadian homeonwers sell their homes and move into rental accomodation enmasse during a six month period?

Of course not. The federal government created a unique program through CMHC specifically targeted at allowing Canadian chartered banks to move tens of billions of dollars of assets off of their balance sheets. The reason? Canadian banks couldn’t raise sufficient and/or cost-effective funding from their traditional sources – primarily other global financial institutions – and needed Crown intervention to keep the wolf from the door. By mid-November 2008, the federal government had agreed to take $75 billion of mortgages from Canadian banks.

Assuming the risk-weighting of these assets was 20%, the feds essentially put $15 billion of capital into the Canadian banks that participated in the $75 billion CMHC program. Even Finance Minister Jim Flaherty agrees:

“At a time of considerable uncertainty in global financial markets, this action will provide Canada�s financial institutions with significant and stable access to longer-term funding,” said Minister Flaherty.

How is “stable” “long term funding” from CMHC any different than the pref share offerings via the American TARP program, other than the fact that Canadian taxpayers didn’t receive any purchase warrants on Canadian bank shares as compensation? Let’s not forget, the TARP was originally designed to take assets off U.S. bank balance sheets so as to free up capital.

The Canadian government also took steps in October 2008 to guarantee medium term lending in an effort to underpin the inter-bank lending market (see prior post “Political expediency trumps free market” Nov 3-08).

I’m all for paying teams what the market will bear (see prior post “Media new battle ground in I-bank bonus season war” Nov 25-09). But this heads I win, tails you lose bonus madness can’t be justified by the “lack” of a federal bank bailout.

There is ony a subtle distinction between injecting capital into a bank and relieving it of assets so that it can avoid a capital injection. Kind of like your Dad temporarily buying your bike from you when you ran out on money in University, and then selling it back to you six months later when you were flush from a summer job.

The notion that Canada’s “free market” took care of itself over the past 15 months is poppycock.

MRM
(disclosure – we own BMO, BNS and TD in our household)



Read more: http://www.wellingtonfund.com/blog/2009 ... z1dtKdTLEQ

[admin]

http://www.pacificfreepress.com/news/1/6148-ottawa-misleads-on-canadian-bank-bailouts.html



THU
06
MAY
2010
Ottawa Misleads on Canadian Bank Bailouts
written by Erik Andersen
Submission to the Minister
by Erik Andersen
Dear Chairman; it is now being said publicly that Canada’s banks were never given “bailout” help by the Federal Government. As recently as this morning on a CBC Early Edition interview out of Vancouver, a guest made this assertion and Mr. Cluff let it go unchallenged.
On October of 2008 Prime Minister Harper publicly announced that “Canada Mortgage and Housing (CMHC) will purchase up to $25 billion in insured mortgage pools as part of the Government of Canada’s plan, announced today, to maintain the availability of longer-term credit in Canada.”

On November 12, 2008, another $50 billion allocation was announced. The official text was; “The Honourable Jim Flaherty, Minister of Finance, today announced the Government will purchase up to an additional $50 billion of insured mortgage pools by the end of the fiscal year as part of its ongoing efforts to maintain the availability of longer-term credit in Canada.

This action will increase to $75 billion the maximum value of securities purchased through CMHC under this program”.

By this program the commercial banks loaned money to the federal government so that it in turn was able to purchase the above mentioned mortgage pools. Do you and your fellow Members not consider this to be a “conflict of interest” transaction at the minimum?



Mr. James Rajotte
Chairman of the Standing Committee on Finance

Sixth Floor, 131 Queens Street

House of Commons

Ottawa, Ontario, K1A 0A6

Ref; Federal Financial aid given to Canadian Chartered Banks


A report by Bloomberg dated January 23, 2009, indicated the government had pledged as much as $200 billion in this matter.

Regardless of the modifiers, the above record of financing activity clearly indicates that the citizens of Canada traded cash money that had to be borrowed (think or our deficit) for the purchase of “insured mortgages” that the world has come to recognize as code words for “toxic assets” or “liars loans”. By this program Canadians have lessoned the financial risk burdens of the shareholders of our banks. Also, by this program Canadians have enabled our banks to engage in foreign acquisition such as the purchase of Commerce Bancorp of new Jersey by TD Canada Trust; the Alabama National Bancorp by Royal Bank’s subsidiary RBC Centura; the ABN AMRO leasing division by the Royal Bank; etc.

Apart from the staggering conflict of interest condition this program represents it still constitutes a “bailout” as most Canadians now understand the word to mean.

As parliamentarians and particularly as members of the Finance Committee, please correct the public misconception that the Government of Canada did not “bailout” Canada’s banks when in fact we all still own $75 billion of their valueless paper.

Sincerely

Erik Andersen

Cc Standing Committee on Finance

Jean Crowder, MP

Robert Oliphant. MP

Chris Bowers; Publisher of the Shingle

James Daw; Journalist

Toby Sanger; Economist

[admin]

citing reasons like "timeliness" the TD becomes another bank who has decided to walk away from an independent dispute resolution process for the industry. This industry expert knows from experience that the truth behind the move is that OBSI was offering customers a fairer settlement process than what this bank was willing to accept. If you are a customer of this firm, you must know that they are NOT following best practices for treating customer complaints, and they have hired yet another industry handmaiden to ensure customers might not have full fairness..

National Post
TD bank exits national ombudsman


National Post
Theresa Tedesco, Financial Post

Oct. 27, 2011 | Last Updated: Oct. 27, 2011 3:08 AM ET

Toronto-Dominion Bank will no longer resolve disputes with aggrieved bank clients through the Ombudsman for Banking Services and Investments (OBSI).

Effective Nov. 1, all new cases involving TD's personal and commercial banking customers in Canada will be handled through ADR Chambers Banking Ombuds Office (ADRBO), the bank announced Wednesday. ADRBO, a privately operated mediator, will provide independent services to banking customers who do not agree with the responses and recommendations made by TD's internal ombudsman.

Canada's second-largest bank, which is among a group of major financial institutions agitating for an overhaul of OBSI, says its decision to quit the national mediator of last resort stems from the bank's desire to find "ways of improving customer experience and particularly problem resolution and response times."

While OBSI will continue to work on TD's existing files - about 40 to 50 in total - all new complaints will be handled by ADR Chambers starting next month.

The departure marks the second time a major Canadian bank has relocated its dispute-resolution business away from OBSI in favour of ADR Chambers. Royal Bank of Canada, the largest in the country, was the first to exit OBSI for its banking dispute resolution three years ago.

"We are concerned about the length of response times," explained Paul Huyer, TD's internal ombudsman, said in an interview. "We watched the way ADR handles RBC cases and over time we came to the conclusion that they are better than OBSI, as much as 50% faster response on straightforward cases."

A spokesman for OBSI questioned TD's motives. "TD has never raised timeliness as a problem in OBSI's handling of banking complaints, so we are surprised to see that given as the reason for their departure," said Tyler Fleming, a spokesman for the not-forprofit mediator.

Mr. Fleming also defended OBSI's track record. "We consistently exceed our standards for the length of time it should take to resolve a banking complaint. For straightforward banking complaints, it takes less than 60 days on average to investigate," he said.

TD's move is the latest salvo in a long-running battle between some of the country's largest banks and brokerages and OBSI.

Created in 1996 to review complaints by small businesses against chartered banks, OBSI is the only independent dispute-resolution provider in the financial-services industry. Its mandate expanded in the past decade to cover all unresolved grievances.

As arbitrator of last resort, OBSI resolves disputes between the 600 participating banks and investment firms and their customers if an agreement can't be reached between them.

However, while the major banks and credit unions participate on a voluntary basis, the investment industry - brokerages, and mutual fund companies - joined OBSI on a mandatory basis in 2002 as required by the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Funds Dealers Association of Canada (MFDA).

But there has been tension building between the industry and OBSI in recent years. Troubled by the growing number of consumer complaints filed against them, the length of time to resolve the disputes and the steadily increasing damages being awarded to clients, investment dealers are demanding changes to OBSI's governance structure to make it more transparent and accountable.

Earlier this year, RBC Capital Markets Ltd., TD Waterhouse and Manulife Financial Corp. filed an application with IIROC, the national self-regulator overseeing investment dealers and equity trading, for an exemption from the mandatory provision that requires them to resolve disputes through OBSI.

Representatives from the firms met with senior secur-ities regulators in May when they requested - and were subsequently denied - an application to opt out of funding and using the mediator's services in favour of using private dispute-resolution firms of their choosing.

That application to opt out was denied by IIROC and the MFDA last May. Since then, the dealers and OBSI have been working to sort out their differences.

"We agree with the regulators that one single, independent dispute service is preferable and that should be OBSI," Mr. Huyer said. "We're committed to work with regulators and OBSI to improve the service and reform it."

OBSI's Mr. Fleming said although the ombudsman is "encouraged that TD has come out in support of OBSI as the single, independent disputeresolution service for investment complaints," he called the bank's decision to withdraw from OBSI for banking complaints "puzzling."

ttedesco@nationalpost.com

[admin]

banksters.jpg (10.71 KiB) Viewed 22406 times

Canadian bank bailout total touches $186 billion

2 December 2010
News item: Big Five banks tapped Fed for $111 billion funds during financial crisis

I’m reminded of Bill Clinton’s infamous line: “I did not have sexual relations with that woman, Ms. Lewinsky.” Thanks to the U.S. Federal Reserve, the proverbial blue dress has now been found.

It was about a year ago that I wrote a post about the $75 billion financial assistance program that the Canadian government provided to the Canadian banking fraternity between September 2008 and March 2009 (see prior post “No Canadian bank bailouts? Says who?” December 10-09). Not that the program wasn’t vital to stabilizing the domestic banking system, but I was annoyed about the crowing that “Canadian banks didn’t need any help”.

The disclosure this week from the U.S. Fed is remarkable (via the Globe and Mail), and we’ve now learned that the U.S. government provided an additional $111 billion of financial assistance to Canada’s five largest banks. That’s on top of the $75 billion Canadian government capital relief program via CMHC.

A pseudo injection of $186 billion of capital — in the form of transferring assets to governments in exchange for cheap cash — seems like a whack of money for an industry that obstensiby required no public support during the recent financial crisis:

There is ony a subtle distinction between injecting capital into a bank and relieving it of assets so that it can avoid a capital injection. Kind of like your Mom/Dad temporarily buying your bike from you when you ran out on money in University, and then selling it back to you six months later when you were flush from a summer job.

MRM



Read more: http://www.wellingtonfund.com/blog/2010 ... z1b4CoDkxP

[admin]

Tuesday, August 9, 2011

NEWSFLASH OBSI In Critical Condition
Canada: Banks Stomp OBSI to Near Death


“In a shocking news development, we get word that a gang of extremely large, powerful and petulant banks have stomped the current Ombudsman for Investments to near death”!

In investigating the disturbing allegations we, like most Canadians, are confused as to why such large and powerful beasts would suddenly turn on such a small, frail, and youthful position.

For those requiring more background, the OBSI is the “ombudsman for banking services and investments”. This position was formed in the late 1990s when rumours were heard about a rampaging group of banks beating up small business owners and stealing their lunch money. No charges were laid as the surviving small business owners were hesitant to risk future lunch money. In 2002 the OBSI added the investment industry to its mandate; attempting to provide fair resolution to small retail investors who wondered how their current lunch money and future lunch reserves (RRSPs) had seemingly disappeared from their investment accounts. Of course many of these nest eggs were “prudently” invested by the gorillas in the Investment industry including of course the bank gang.

Many speculate that adding the investment bullies to the mandate of the ombudsman was short-sighted. Like a British police constable, the ombudsman carries no weapons when confronting these wild marauding gangs. Apparently the governments of the day felt that moral suasion and a proper upbringing would keep the gangs in line. Unfortunately, it would appear that power and greed have tilted the scale away from any fear of public condemnation. The large powerful bank investment firms appear to actually believe that whatever they do is always correct and any opposition is to be immediately crushed!

In fairness, it appears that the ombudsman did not even get his weapon (public disclosure) out of his holster before he was set upon. Despite clear warnings of the dangers, the ombudsman actually thought he was a respected friend of the gangs and appears to have walked into the back alley willingly and without back-up. One can only wonder at his surprise when the organized criticisms began raining down on his unprotected skull. Early word from investor advocates familiar with the case is that the ombudsman was guilty of having his own opinion on both the veracity of the banks documents and the claims made by the banks commissioned sales forces. Indeed, some have actually charged the ombudsman with talking to investors who lost their savings and in several radical cases, believing the word of a lowly common client over that of the banks commissioned sales person.

Medical staff tells us it will be some time before we know if the ombudsman will survive his injuries. While the powerless neighbourhood watch (investor advocates) keep a vigil at the hospital bedside of the ombudsman; the power, wealth and sheer overpowering influence of the gangs continues to threaten any recovery. Amid rumours that the gangs are looking at appointing their own “gang controlled” ombudsman to fill the void they are attempting to create; government and regulatory officials appear to be keeping a very low profile. Apparently the gang is so powerful even the government is leery of challenging their tantrum.

Back to you in the mainstream media for our next follow up on this troubling story......

soismike

Posted by Mike Macdonald at 2:53 PM

[admin]

http://progressivepolitiques.blogspot.c ... %20bailout

SUNDAY, AUGUST 8, 2010
To the Contrary, Canada DID Bail Out Her Banks
Canada bailed out its banks.

What!?, you say. Us? But we have 'regulated banks'; and didn't Mr. Harper say that we didn't have to “bail out the banks?”

He said it alright. It's also true that we have no bill passed in parliament that is comparable to TARP.

So how did we do it?

$75 billion in government allocated money went to the Canadian Mortgage and Housing Corporation (CMHC) to purchase mortgages from the banks in the fall of 2008. The CMHC is a crown corporation akin in purpose and function to Fannie Mae and Freddie Mac. The allocations increased government borrowing to $89.5 billion in 2008-2009 (compared to $13.6 billion in 2007-2008)

What's more, the CMHC increasingly insures high-risk mortgages with money borrowed from the banks themselves—meaning the taxpayer takes all the risk by way of the CMHC. Combining mortgage insurance and mortgage backed securities owned by the CMHC (fancy terms meaning if the people find themselves unable to pay en masse, the government would have to pay for the crown corp's shortfall) rings up to over—wait for it—$500 billion. This is substantially up from the CMHC's $100 billion in securitization back in 2006.



Other significant actions by the CMHC in recent years have been to reduce the required down payment to 0%, and increase amortization (how long one has to repay a mortgage) to 40 years! This makes it far easier for people to purchase houses they simply won't be able to afford.

So what really happened dear reader? We effectively bailed out our banks by purchasing mortgages through a crown corp. What's worse: the foundations have been laid for a future crisis to be even worse.

I feel it's crucial you know and understand these fac ts. This is what is going on under the Conservatives. The crisis that should have been the death bell for unsustainable real estate finance seems more like its C-section birth.


Further Your Knowledge AND PLEASE COMMENT!:

“Canada's Good Bank Myth”, Murray Dobbin, The CCPA Monitor Volume 17 No. 3, July/August 2010
“CMHC Growth Fuels Worry Over Risk” By Boyd Erman and Tara Perkins, The Globe and Mail, October 16, 2009
“CMHC Annual Report” http://www.cmhc-schl.gc.ca/en/corp/abou ... AR2009.pdf
“Canada's $75 Billion Bank Bailout” by Michel Chossudovsky, Centre for Research on Globalization, January 25, 2009 http://www.globalresearch.ca/index.php? ... &aid=12007
Wikipedia: http://en.wikipedia.org/wiki/Canada_Mor ... orporation

[admin]

from independentinvestor.info


2010 and Canadian Banks: bigger not better?

Information started to trickle out in 2010 suggesting that all is not well in the Canadian banking empire. Consider this:

More and more of Canadian bank expansion is targeted for the US. Are they over invested in the US?

A new research report by Deutsche Bank Research shows that Canadian banks are in worse shape compared to other developed market banks based on the Borrower Concentration ratio. This ratio measures the diversification of banks’ foreign exposure across other countries. Put another way, this measure identifies those countries that have overly-concentrated their lending on specific regions or countries. Source: SeekingAlpha or as a PDF doc.1951.
As a result Canadian banks may be getting too big to fail: see MarginalRevolution or as a PDF doc.1941.

Think this is just theoretical? Who knew before it leaked out that at the height of the financial crisis Canadian banks were concerned enough about their situation that they secretly took over US$ 100 billion in TARP emergency payments from the US Federal Reserve; see Slater G& M 2010 canadian banks and TARP or as a PDF doc.1953. The Canadian banks made no disclosure to their own investors. Were the Canadian Minister of Finance and Bank of Canada aware at the time? Did they advise Canadian securities commissions? Did any of these government bodies consider if Canadian investors were entitled to know?

http://independentinvestor.info/content ... 3/236/1/1/

[admin]

Which of the Six Big 6 Banking Houses Was the Most Shameless Corporate Outlaw?
These aren't nice folks; their collective rap sheet includes fraud, sex discrimination, collusion to bribe public officials... even laundering drug money for Mexican drug cartels.

read the post at


http://www.alternet.org/story/149375/wh ... ate_outlaw

[admin]

The federal government strengthened bank accountability by including some good measures
Bill C-8 (passed in June 2001). However, some key gaps were left that made it difficult
to ensure banks and other financial institutions serve all Canadians fairly and well and
use our money responsibly, and Bill C-37 (passed in 2007) did little to close these
gaps.

The banks recorded $16 billion in losses and writedowns in 2008 because of their own
risky and irresponsible lending, and all the federal government has done is offer them
subsidies of up to $200 billion, without requiring the banks to do anything return in
terms of better service or prices for customers, and more responsible lending and
investing.

As a result of the subsidies, and interest rate and fee increases imposed by the banks
this year, the banks have just recorded almost $21 billion in annual profits, and given
their executives millions in bonuses.

I'm writing to urge you and the federal government to make the changes needed to ensure
our big banks meet our needs, lend and invest our money responsibly, and remain
Canadian-owned and controlled.

The following key changes must be made to ensure better Canadian big banks:

1. Facilitate the creation of a Financial Consumer Organization (FCO) to help consumers
(as recommended by the Task Force on the Future of the Canadian Financial Services
Sector and a House and Senate committee in 1998), and an Individual Investor
Organization (IIO), by requiring banks and other financial institutions to enclose an
FCO information pamphlet in their mailings to customers, and an IIO information pamphlet
in their mailings to shareholders, with both pamphlets inviting people to join the
watchdog groups at a nominal annual membership fee.

2. Require banks and trust companies to provide detailed information on loans,
investments and services to customers, as required in the U.S (to track whether banks
are fairly meeting the needs of individuals and businesses on a community-by-community
level and, as in the U.S., require corrective action if banks are not meeting customer
needs).

3. Empower the Competition Bureau and Financial Consumer Agency of Canada (FCAC) to
conduct an audit of profits from service charges and credit card interest rates, and
reduction in competition community-by-community across Canada, and savings from closing
branches and firing tellers, over the past 15 years, and require banks to cut charges
and open branches if past profits were excessive;

4. Prohibit any future service charge or credit card interest rate increases if the bank
can't prove the increase is justified;

5. Require banks and trust companies to disclose the profit/loss record for any branch
proposed to be closed, to allow for a full review of the reasons for the closure;

6. Require banks and trust companies to prove that they have a fair, responsible and
very good service, lending and investment record every year for the past 10 years as a
mandatory condition for any financial institution bidding on federal government
contracts;

7. Require the Financial Consumer Agency of Canada Commissioner to disclose the name of
the financial institution and the terms of settlement whenever the Commissioner finds
that an institution has violated the law (currently, the Commissioner can only disclose
the name of the institution if the Commissioner prosecutes the institution), and change
the complaint process so that consumers can complain directly to the Ombudsman for
Banking Services at any time without having to go first to their bank's ombudsman;

8. Give customers access to the money they deposit by cheque as soon as the cheque
clears, and;

9. Given that each of the big banks makes billions of dollars each year, increase the
maximum penalty for violating the Bank Act from the too-low amount of $200,000 to the
more effective penalty of $50 million.

Canadians have made it clear in every poll conducted over the past 15 years that they
need, and want, better banks. Please close these gaps by passing a law to ensure that
all financial institutions in Canada serve all Canadians fairly and well, and can be
held accountable for poor lending, investment or service records.

And please do not let Canada's banks take over any other financial institution, or merge
together, before you have set up the Financial Consumer Organization and the Individual
Investor Organization, and the strict bank lending, investment and service disclosure
and evaluation system outlined above.

Please let me know what steps you are taking to introduce bills to close these bank
accountability loopholes, to pledging in your party's election platform to close these
loopholes.

My vote in the next federal election will very much depend on your response. I look
forward to hearing from you.

Sincerely,

(put your name, postal address and email address here)

*********

PLEASE SEND a copy of your letter to <dwatch@web.net>

PLEASE PASS THIS MESSAGE ON to anyone interested in bank accountability and/or corporate
responsibility in Canada

AND PLEASE DONATE NOW to bank accountability at:
http://www.dwatch.ca/camp/support.html

[admin]

Jim Middlemiss, Financial Post · Wednesday, Aug. 11, 2010

Canadian Imperial Bank of Commerce breached Canadian accounting standards by failing to properly disclose its exposure to
subprime mortgages, says expert testimony filed in Canada's biggest lawsuit to stem from the credit crisis.

Gordon Richardson, the KPMG professor of accounting at the Rotman School of Management in Toronto and a PhD, writes in his 65- page review of the bank's subprime disclosure that "CIBC failed to comply with GAAP disclosure requirements ... and the information provided to pertaining credit risk was, prior to December 6, 2007, wholly misleading to the market in general and to class members who invested in CIBC."

The lawsuit covers the period of May 31, 2007 to Feb. 28, 2008, a tumultuous period in the capital markets when credit started freezing up and investment firms scrambled to understand their exposure to subprime investments.
Mr. Richardson said, "CIBC substantially overstated its income for the last three quarters of fiscal 2007 and the first quarter of 2008 and income for these periods should be restated in order to comply with GAAP." The overstatement resulted from "indefensible assumptions" related to its hedge fund exposure.

A second expert witness report from a noted securities valuation firm in the United States pegs CIBC investor losses at a maximum of $6.6-billion.
The filings are made in preparation for the mammoth class-action suit, which is expected to come before the Ontario Superior Court for certification in March 2011.
CIBC spokesman Rob Mc-Leod said, "CIBC denies these allegations and plans to vigorously defend this action. CIBC is confident that, at all times, its conduct was appropriate and that its disclosure met applicable requirements." The bank is expected to file its response by the end of August.

Joel Rochon, who is representing Thornhill, Ont., investor Howard Green in the lawsuit, which was filed on July 22, 2008, declined to comment on the expert testimony reports.
The lawsuit claims CIBC misrepresented the bank's exposure to subprime investments and failed to implement appropriate risk-
CIBC should restate earnings: expert Page 1 of 2
http://www.nationalpost.com/todays-pape ... rt/33833... 11/08/2010
management controls related to billions of dollars in investments in collateralized debt obligations and U.S. subprime mortgages. A similar investor lawsuit in the United States covering CIBC disclosures between May 2007 to May 2008 was dismissed in March.
Judge William Pauley of the Manhattan Federal Court wrote, "CIBC, like so many other institutions, could not have been expected to anticipate the crisis with the accuracy [the] plaintiff enjoys in hindsight."

However, the laws between the two countries differ and CIBC is being sued in Canada under a new section of the Ontario Securities Act, which makes it easier for investors to sue corporations for misrepresentations. An investor class action against Imax Corp. over disclosure about the status of theatre construction was certified by an Ontario judge in February.
Mr. Richardson's extensive report examined CIBC's exposure to various tranches of subprime residential mortgage-backed securities and collateralized debt obligations tied to subprime mortgages, including its hedged and unhedged position.

He makes some damning conclusions.

"In a nutshell, investors needed to be told by no later than April 30, 2007 that CIBC's maximum exposure to credit risk was $11.4- billion. Instead CIBC misled its shareholders by remaining silent and by misstating and minimizing its exposure." He writes that it wasn't until Dec. 6, 2007 that the bank "stunned the investment community" and revealed the $11.4-billion exposure.
He said based on the TABX and ABX indexes, which tracked the value of credit default swaps tied to subprime mortgage bonds, the bank should have realized that its main $3.5-billion hedge with counterparty ACA Financial was in trouble. "CIBC had to have known that its hedge of $3.5-billion with ACA had collapsed by April 30, 2007 and by no later than July 2007."
He said that should have resulted in fair value writedowns of $769-million, $2.38-billion and $3.82-billion for the second and third quarters of fiscal 2007 versus the $273-million and $747-million hit the bank declared.

He examined two other hedges involving XL Capital and FGIC Corp. and concluded that "CIBC should have recorded cumulative U.S. subprime fair value writedowns between $6.54-billion and $6.95-billion by the end of the first [fiscal] quarter of 2008, rather than the $4.14-billion cumulative U.S. subprime write own it did take.... "

While the CIBC suit is one of the few pieces of subprime litigation in Canada, in the United States there have been more than 400 lawsuits filed in federal courts related to the credit crisis, according to NERA Economic consulting, which tracks such suits.
Elaine Buckberg, a senior vice-president at NERA in New York, said her firm has identified 74 cases relating to collateral debt obligations, 10 of which were filed in 2010 and the others filed between 2007 and 2009.

Overall, U.S. credit crisis lawsuits have resulted in US$2.1-billion in settlements involving a number of parties. Mortgage lender Countrywide Financial Corp. agreed to pay US$600-million to shareholders who accused it of misleading investors about its lending practices. Mortgage loan originator New Century Financial settled with investors for $125-million. Merrill Lynch settled its subprime litigation for $475-million. Charles Schwab paid out $225-million over allegations of misrepresentation related to one of its mutual funds.

It isn't the first investor class action CIBC has been at the centre of. In 2005, it settled a claim by Enron Corp. shareholders for US$2.4-billion.

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The dangers of taking investment advice from your bank
By Ian Rose and Andy Verity
BBC Two, Money Watch

http://www.bbc.co.uk/news/business-10604367

Sue Murton lost £17,000 after investing her life-savings in a fund recommended by her bank
Interest rates for savers are at their lowest levels in history, so many people are turning to investment funds to get their money to work harder.

The problem is they are taking advice from their High Street banks and, in some instances, they are not getting advice that is suitable for them.

Sue Murton, from Aldeburgh, is among hundreds of customers who have complained to the Financial Services Ombudsman, after receiving poor advice from in-branch advisers which led to them losing large chunks of their life savings.

Sue wanted to boost returns from her savings because, like millions of others, she was receiving poor interest rates that meant her money was shrinking against inflation.

Risky investing

Sue was looking for a "cautious-to-medium" risk investment and was advised by Barclays to put £50,000 into a so-called "Balanced Fund", believing it to be matched to her relative unwillingness to take big risks - a key requirement for correct financial advice.

However, within months, she had lost £17,000.

"It's certainly not given me the nice comfy, cosy retirement that I was hoping for. I'm furious and I'm bitter," Sue says.

Continue reading the main story
“
Start Quote

The sales people involved were maximising their sales by selling existing investments and moving them… simply to increase the commission”

Richard Davis
Independent financial adviser
"The fund was a newly launched fund with 60% in stocks and shares, which are notoriously volatile," says Richard Davis, an independent financial adviser, who is campaigning for compensation for dozens of Barclays customers.

"The other 40% was in junk bonds and exotic financial instruments, all of which you would not expect to find in the portfolio of someone entering retirement."

Sue Murton's claim for adequate compensation was resisted by Barclays, despite two rulings in her favour by the Financial Ombudsman.

After the BBC got in touch with Barclays, and the Ombudsman made his final decision in Sue's favour, Barclays finally paid her a compensation cheque for the full amount of money she lost.

"Outrageous" tactics

In the Financial Service Ombudsman's most recent report, Barclays Bank attracted more complaints about its investment business than any other bank brand on the High Street.

In some cases, it has accepted the validity of the complaints, but it is resisting compensation claims from others.

Heather Spicer, aged 83, says she was pressured into taking a financial advice session by staff at Barclays in Colchester.


Barclays had more complaints than any other bank
Heather felt harassed after being asked repeatedly by Barclays branch staff if she wanted financial advice, prompted by the large sum she was keeping on deposit which she inherited after her husband died.

"This is the money I had put aside for myself when I would need it. For care, hospital. All that sort of thing," she says.

Barclays staff advised her to put more than £100,000 into what was described as a "cautious" fund, where it quickly lost £40,000.

"Heather's case, frankly, was outrageous," Mr Davis says. "She was churned out of investments that she'd held for many years.

"To move her into a riskier investment environment was simply unconscionable.

"It began to become clear that the sales people involved were maximising their sales by selling existing investments and moving them… without due justification, but simply to increase the commission available to them," he adds.

Heather Spicer threatened Barclays with a complaint to the Ombudsman and the bank eventually paid her compensation.

Industry standards

Consumer group Which? has highlighted inadequacies in the financial advice given at High Street bank branches.

In a recent mystery shopping exercise to test whether the banks were giving good or bad financial advice, it conducted visits to 37 branches and was given the correct advice in only four of them.

Which? told Money Watch that the standard of advice in banks and building societies on the High Street was not up to scratch and customers should stay clear of them.

The British Bankers Association told Money Watch that financial advisers could only work with the information customers gave them.

Barclays says its advisers are not incentivised to sell any particular products and it has extensive controls in place to ensure a high standard of service.

How to beat tough times: Money Watch, BBC Two, 2000, Wednesday 21 July.
http://www.bbc.co.uk/news/business-10604367

(advocate comments........all truth goes through three stages, first it is ridiculed, second it is violently attacked, and third it becomes self evident.......Canada still views its own banking industry as being "above examination" while stealing the larger part of the wealth of the country with it's oligopoly powers. Britain, Australia, USA and others are miles and years ahead of Canada. Financial abuse and molestation by money pros here in Canada is standard industry practice.)

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FRIDAY, SEPTEMBER 11, 2009

Corruption in Canadian Brokerage and Banks
The CTF received this letter from Larry Elford and received his permission to reprint. His assertions are beyond our ability to corroborate, but his insights and comments seemed worth passing on. (visit the Canadian Taxpayers Federation)


If I could speak with my prime minister, here is what I would like to say.

In 2004 I resigned my career of twenty years inside the brokerage industry, mostly working with major bank owned brokerage firms. I resigned because of my failure to have an impact on raising the matter of ethical failures. Failures which I witnessed each and every day within my industry. Ethical failure I found to be standard industry practice, despite codes of ethics, codes of conduct and rules to the contrary. Virtually none of the rules are enforced when they interfere with revenue.
My efforts to support change fell on deaf ears and I failed to bring anything like “best practices” into my own industry. I failed. I left.

I took on personal project to inform and educate the public about financial abuse by people claiming “trusted financial advisor” status. I was dealing in crimes and abuses which earned millions of dollars within every investment office that I knew of.

In 2005, after a fund company employee took his own life, in circumstances of management retaliation so brutal they can only be described as “corporate and legal torture”, I decided that I needed to inform yourself and others of the magnitude of the crimes against Canadians, the ease with which they were perpetrated and the lack of enforcement in Canada. I failed to gain your attention to the matter, and I failed to interest your Parliament in addressing these types of crimes.

At that time I was then dealing with an example where financial abuse of customers had placed over $800 million into the pockets of the investment firm. This case is on file with the standing committee on finance. It failed to raise an eyebrow within your government.

In 2007 or 2008, the market for toxic ABCP investments imploded, catching everyone with their pants down. It left $32 billion missing in action from our Canadian economy. The supposed authorities who now claim to investigate this matter, were in fact well documented participants in the legal tricks that allowed this $32 billion to disappear in the first place.* I ask how you can preside over a system which lets conflicted regulators aid financiers and then allows the same conflicted regulators to investigate the damage done?



I testified in Ottawa to a standing committee on finance on these matters, and yet I still have failed to properly engage those at the top. No change. No response. I failed.

I add up the crimes against Canadians, against our economy, and I conclude that clever, cunning white collar fraudsters are putting more money in their pockets each year in Canada, than the economic damage done by each and every other crime in the entire country, combined.

Here is where you have failed as leader. Failed to set aside political self preservation in favor of the public interest. Failed to protect Canadians from abuses by rich and powerful parties. Failed to protect our economy from infection by financial pandemic.

The very best you have done is to hire one securities commission head, to begin work on a new national securities commission. Hired from one of the very securities commissions who participated in the legal “tricks” that allowed each of these crisis to infect Canada. Perhaps will allow them to infect Canada for years to come. Even Richard Nixon was known to say, “you cannot trust the people who made the mess, to clean it up.”

You have failed to understand that allowing the foxes to guard the henhouse is an example of “worst practices”. You have failed to give us anything that looks like “best practices”. You are failing on giving us a modern, honest, unconflicted securities regulation. The industry makes more money on dirty, dishonest, and conflicted.

We deserve better. We deserve a leader who understands this and does not fail to act, when our entire economy, our financial future, and the financial health of Canadians is at daily risk from financial predators.

With respect for your position, you have failed us and you have failed the position.
Each and every Canadian, with exception of fraud artists and banksters, are now paying the price. Fraud artists and banksters are toasting what a great country Canada is to commit white collar crime.

Larry Elford
Executive director of http://www.investoradvocates.ca
(former CFP, CIM, FCSI, Associate Portfolio Manager, retired)
Lethbridge AB

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Ask yourself if our financial institutions should be allowed to become "too big to prosecute?"

Are they there already? Most times I see crimes, frauds or abuses over some figure in the mid millions, it becomes an "impossibility" or at very least "improbable" that our RCMP IMET (or anyone) can find the moral courage to prosecute, much less find the time or talent to investigate.

You may disagree, but with crimes, abuses or frauds in the high millions or even billions, we are talking about a free ride for our biggest institutions. Do some of your own research on topics such as "trusted criminals" and you will find university level courses in the USA that study, research and write on this very subject. Here in Canada we still practice the old British system where we give some of our greatest crooks the order of Canada. Our banks have such a grip on the Canadian population that they have spun the PR so well that we think and act like they should be "above examination" in Canada. They are constantly above the law. Very British indeed.

Time for a change of thinking Canada. We are 100 years behind and winning the race for last place in fighting financial criminals in our midst.