RBC will show some guts...maybe - Macleans.ca

RBC will show some guts…maybe


I am delighted to see that Gord Nixon is prepared for a little prudent treasure hunting amid the wreckage of the U.S. financial system. This is encouraging in the wake of JP Morgan’s shotgun takeover of Washington mutual last night.  JPM takes on an estimated $31 billion in troubled loans, but also gets a hold of America’s biggest savings and loan, reaching almost half of the country’s population, for a mere $1.9 billion. TD was one of several banks that had expressed interest in WaMu, but this big fish goes to the same bank that swallowed Bear Stearns las March at government behest.

When the smoke finally clears from this disaster, and it will, JP Morgan and Bank of America are going to be in a very powerfu position in the US financial market. Surely there are going to be some nice meals for Canadian banks too, if only we have the will to elbow our way to the table.


RBC will show some guts…maybe

  1. “if only we have the will to elbow our way to the table.”

    I remember watching Diane Francis on Allan Gregg show a few months ago when she was promoting Who Owns Canada Now?

    The conversation drifted into her ideas on why Canadian businesses, particularly banks and other financial institutions, don’t do very well internationally. Francis talked about how banks are coddled within Canada and this lead to them being unable to compete successfully in the international arena where it’s much more cut throat because they aren’t use to real competition.

    There should be some good pickings, if our financial companies do decide to buy. Looks like some repubs, particularly in the House, are going to try and get some private investment money into the mix instead of forcing the public to foot the $700 billion bill.

  2. Not a big fan of Dianne Francis myself. A much better book on this topic is Andrea Mandel-Campbell’s “Why Mexicans Don’t Drink Molson.”

    I don’t entirely buy Andrea’s argument that Canadians are culturally incapable of competing. But the book makes a pretty powerful argument about our stunted business environment and it’s full of interesting anecdotes.

  3. Thanks Steve M, sounds interesting. Will search it out.

    I don’t want to comment about someone’s book that I haven’t read but I, too, would question the thesis that ‘Canadians are culturally incapable of competing’. I think we would be even better at it if there weren’t so many rules and regulations limiting competition within, and without, Canada.

  4. Is there ANY evidence at all that Canada is more regulated, or is it just the usual right-wing BS?

    This really kills any notion that the federal government has to let Canada’s banks merge so they can compete abroad (and compete even less in Canada than they already do)

  5. I don’t think government policy is to blame for the frustrating timidity of Canadian business. I think it’s something in Canadian culture generally that makes us more risk-averse than Americans in particular. I think we need to celebrate entrepreneurialism more… how I dunno…

    Cancelling CBC’s “Venture” last year was certainly a step in the wrong direction.

  6. Please look at the subprime crisis in the states and tell me again how being risk averse is a bad thing?

    Yeah, we don’t hit the highs of the US, but we don’t hit the lows either. That’s part of why I prefer Canada. Could I make more money if I went down to the states and plied my trade? Absolutely. The downside is that I’d have to work a lot harder to do it, and be a lot more concerned about failure if it didn’t work out.

    That kind of stress, to me, just isn’t worth the extra.

  7. Thwim – that’s a fair point, but I would say there’s a difference between prudence and being risk-averse. there’s certainly a good argument to be made that we strike a better balance here. That said, I think we may be about to find out that we’re not quite as insulated from the U.S. ‘lows’ as we might think.

    And DR – you’ve got a point too I think. there is a tendency to portray Canada as a horribly over-regulated nanny state in comparison to the US. I think we are more tightly regulated, and I would advocate getting rid of some (but not all) of those regulations. But the U.S. is also far more heavily regulated than many people believe. And most of those regulations are in place for very good reasons. (And after this crisis, the financial industry will be even more tightly regulated than it was before.)

  8. the financial industry will be even more tightly regulated than it was before.

    Of course it will, for better or likely for worse, if the powers that be suddenly coerce 300 million “investors” into the picture.

    Better yet: bring on the bankruptcies. Let’s have our painful recession; we’ve earned it. If our prosperity was brought on by the credit unworthy taking on too much credit, and by the stupid bankers lending them the dough, my how we have earned it. Let the bankers suffer and see what sort of discipline you get in the future. Bail them out and you will have to cook up rules and regs and enforcers and bribers and kickbacks and look-the-other-way politicians meeting with lobbyists…

    This crisis is NOT the next generation’s fault. It is ours. It is a crime against the defenceless unborn for a government in major deficit and debt position to allocate US$700 billion to attempt to fix this. Emphasis on “attempt,” ‘cuz this stunt might not even acieve its goals anyways.

    So long, capitalism Write if you get work.

  9. Further to my point about regulation-a Fraser/Cato report had Canada 7th in the world in economic freedom. Just a bit ahead of the US. 10th in regulation, just a bit below the US. (We sadly now know our food testing is less strict)

  10. Since it is apparently no longer legal to even have a temporary economic downturn, let alone a recession, I guess we will continue to take money from future members of society in order to support the comfort of current members of society.

    Substitute club for society in the above and whaddayaget? An illegal Ponzi scheme.

    Any chance the US will throw high-ranking officials of the Treasury, the Administration and Congress in jail for creating this Ponzi scheme? What if we ask nicely?

  11. myl: I think you’ll enjoy this picture.