Reining in the mortgage king

The finance ministry’s legal oversight of the CMHC was long overdue


In March, Maclean’s warned that the Canada Mortgage and Housing Corporation, the quasi-governmental insurer that underwrites $500 billion of residential mortgages, answers to no one—not Canada’s top financial regulator or even the minister of finance. That all quietly changed last month when Ottawa passed a law that puts the CMHC strictly under the watchful gaze of both the finance minister and the Office of the Superintendent of Financial Institutions (OSFI).

With the new law, CMHC must hand over “prescribed books, records and information” and make those records available to the public. The legislation also allows the minister to set capital requirements and impose fees to compensate the government for the risks it assumes by backstopping mortgages.

CMHC has always said the money it sets aside to cover insurance losses exceeds that required by OSFI. But Finn Poschmann, a C.D. Howe researcher, told the House of Commons finance committee the new law is overdue. “There are a number of informal arrangements through which our oversight agencies are able to have a look at what it is that the CMHC does and the risks to which taxpayers are exposed,” he said. “However, it is an informal arrangement. It’s good to have this in legislation.”


Reining in the mortgage king

  1. Quietly — One thing that Harper learned early on is that doing the obviously right thing gets you in trouble if it wasn’t in your election platform.  I’m thinking of the Income Trust kerfluffle.

  2. Smart move.  We are in good hands with Julie Dickson OSFI.  

    Canadians had become familiar with Sheila Fraser AG but Julie Dickson is also a heavy-weight with our financial institutions.  They are in awe of her down in the U.S. and wouldn’t be surprised if she has been head-hunted just like Fraser.

    “Those who don’t have to face Julie Dickson, who acknowledges that, once in a while, a Canadian financial institution will go the American route and bring out its lawyers instead of heeding her advice. “You do find, on occasion, an institution that doesn’t operate [the Canadian] way,” she says. “It might approach [a contentious situation] in a legalistic manner and come forward and say, ‘Well, this is clearly okay.’ They might not even come forward—they might just do it.

    “I don’t recommend that as a strategy,” Dickson says. “Because we will find out about it.”


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