Canadian Banks Avoided Mortgage Meltdown

CBS Evening News: Bankers Eschewed Subprime Loans, Mortgage Securities; The Result -- No Bank Failures

(CBS)  Two more U.S. banks were taken over by the government overnight. And while a number of this country's biggest banks reported improving conditions this week, some of their accounting methods have been questioned.

One place where none of this banking drama is taking place is Canada, as CBS Evening News weekend anchor Jeff Glor reports.

Ed Clark is a plainspoken, polite and prudent Canadian bank CEO with a few simple rules: "We should never do things for our customers and clients that we don't actually understand. If you wouldn't put your mother-in-law in this, don't put our clients in it."

You may never have heard of Clark or Toronto Dominion bank (aka TD Bank), but it's the sixth-largest bank in North America - and, in the middle of a global banking crisis, a profitable one at that.

"We will make more money in this quarter than any bank in North America," Clark said. "So for a little Canadian bank sitting up here, yeah that feels pretty good."

How did that come to pass?

"Basically, because we didn't do the things that blew other banks up," Clark said.

And neither did TD Banks's Canadian brethren. In the last quarter of 2008, all of Canada's major banks were profitable, collectively making $2.5 billion during a period when U.S. banks lost more than $26 billion.

In fact, since the financial crisis began, American taxpayers have provided more than $300 billion dollars to more than 450 companies. During that same period, from their government, Canadian banks have not received one penny.

One reason: Take those infamous subprime mortgages given to risky homebuyers. They crippled banks in the U.S., where at peak, 25 percent of loans were subprime. In Canada? Three percent.

"Our U.S. subsidiaries did not do any subprime lending. Nothing. Zero," Clark said. "We just said, 'Stay away from this stuff. We know where this is going.'"

Another villain in the financial crisis were toxic mortgage-backed securities - risky loans that were chopped up and resold in countless different ways. Many banks gobbled up the now virtually worthless investments. Ed Clark got out 4 years ago saying they were just too complex.

Clark: "As soon as you see that complexity, you say, 'How can I possibly think I actually can guess whether this will work or not?' And as soon as I hear that, I say, 'Get out of it.'"

Sherry Cooper spent years at the Fed overseeing Wall Street, before moving to Bay Street, the Canadian equivalent.

"It didn't take long for me to discover that this is an entirely different culture," said Cooper, chief economist at the Bank of Montreal. "Canadian banks were up to their ankles in the toxic muck whereas American banks were over there heads."

"A lot of this is about saying, 'Here are old banking rules, and we're prepared to give up short term profit in order to make sure we have a balance sheet that doesn't blow up on us,'" Clark said.

One reason why Canada is the only industrialized nation in the world without a single bank failure in the current economic downturn.

[presjfk]

long waits for vital life saving medicine when dealing with fast advancing/aggressive cancer (just to name one).
Posted by au_fait at 6:15 AM : Apr 19, 2009

You have no idea what you are talking about and are simply repeating the BS that US companies and the government say. Any American would trade their health care insurance for Canada's if they truly knew the difference.

We have the most expensive system in the world and 40 mill are uninsured. The USA system stinks to its core! We are raked over the coals with premiums, deductibles, lawsuits and bankruptcies all thanks to our system. If you have insurance and get sick, really sick - you will then understand just how bad the system is here.

[kesac4650]

Canadian medical providers do not have to worry about being sued for hundreds of millions in malpractice, and don't have to pay the rates to insure against such things.
Those costs in the US can drive medical fees up an additional 50% by themselves.

[daffy64]

I LOVE OUR CANADIAN FRIENDS....SO tell me America..what' so wrong about Socialism?...
Posted by skarrzpop


long waits for vital life saving medicine when dealing with fast advancing/aggressive cancer (just to name one).
Posted by au_fait at 6:15 AM : Apr 19, 2009

I am covered by Federal Employees Health Benefit Program and have Blue Cross/Blue Shield.

On 7/21/2008, I had an accident in my back yard and I went to our local hospital. I drove myself to the hospital clinic called "Urgent Care" which is under the Mayo Healthcare System.

I was there in the "waiting room" for "3.5 hours" and finally was seen by a physician assistant .

I explained my accident and my fall. I was in no pain but had difficulty moving my arms. My hands, wrists and bicep area were starting to show dark blue yellowish bruises.

I was told to take motrin to help reduce the swelling. I have now been in this medical mecca for close to 4 hours. When asked if I had any other concerns, I point out that I could not straighten and extend my arms. The Physicians Assistant then decided to have x-rays, now we are at 5 hours.

The x-rays reveal that I have broken both elbows. My arms are put in slings and I am sent home - 6 hours. I have to wait until Friday to get into the Fracture Clinic - 5 days.

The above is true and happened under good old capitalism....

--

That's pretty bad. In Canada, you just show your Health Card and the doctor will see you soon.

[daffy64]

Hooray for Canada, our quiet neighbor to our north. THEY know how to do business. Perhaps this miserable banking system we have here in the states could learn something. But again, I think not. Greed!!!

--

That's all it is, greed. When you think about all the laws society has, we're already "Socialized" in a way. Is it too much to ask that there be regulations on the banking systems that prevent collapses and hard working people losing all their money to greedy execs?

[daffy64]

long waits for vital life saving medicine when dealing with fast advancing/aggressive cancer (just to name one).

-dn
Nonsense. I had a kidnney stone attack a month ago and they took me in and CATSCANned me right away. The only people that skip lines are millionaire *********.

Posted by daffy64 at 11:57 AM : Apr 19, 2009

My mom was just in the hospital and she had catscan right away too. No wait. And it was a holiday weekend. She has had a hip replacement, an angioplasty, and two eye surgeries also. No long waits.

--

It's a myth created by American health providers and insurance companies and pushed by Neo-con politicians who get some sort of kickback.

More than seventy percent of Canadians don't want the health care system changed in any way.

[heatherczerniak]

Health care is another thing we Americans could stand to socialize in order to make it accessible to everyone. Going totally socialist, however is in no way an improvement over capitalism. Under socialism, everyone is poor because everyone is taxed to death. Literally!

[erasmus111]

When you enter the hospital for a problem, you don't go home until you are FIXED. That means tests, surgeries, whatever.

[erasmus111]

long waits for vital life saving medicine when dealing with fast advancing/aggressive cancer (just to name one).

-dn
Nonsense. I had a kidnney stone attack a month ago and they took me in and CATSCANned me right away. The only people that skip lines are millionaire *********.

Posted by daffy64 at 11:57 AM : Apr 19, 2009

My mom was just in the hospital and she had catscan right away too. No wait. And it was a holiday weekend. She has had a hip replacement, an angioplasty, and two eye surgeries also. No long waits.

[daffy64]

I LOVE OUR CANADIAN FRIENDS....SO tell me America..what' so wrong about Socialism?...
Posted by skarrzpop


long waits for vital life saving medicine when dealing with fast advancing/aggressive cancer (just to name one).

-dn
Nonsense. I had a kidnney stone attack a month ago and they took me in and CATSCANned me right away. The only people that skip lines are millionaire *********.

[starleo146]

Oh that's a silly old argument. Our health care is fine. My Mom just got both knees replaced with no additional charges.

Most Canadian like their health care.
Posted by daffy64 at 11:23 AM : Apr 19, 2009

Our health care just plain stinks the pharmaceuticals and doctors have taken it over for greed they will not accept Canada's health care because of greed they will lose money paid to them, see the heck with doing the right thing MONEY MONEY. We have people on the democrat side as well fighting a change in health care why?Because the Lobbyist have paid big bucks for them to do so. Byrd of west Va. is fighting it and his state has the poorest on this country what does he do for his state build a road to nowhere, he needs to retire senility has sunk in and replace anyone republican or democrat that listen to lobbyist more than doing what is right for their people thy represent

[starleo146]

The U.S. used to be all that it claimed to be. Well, mostly anyways. But now, things have changed. Things aren't good right now, and so, yes, it is better in other countries at this point in time. Hopefully things will get better and once again you can claim the title as the best country in the world. : ) When you allow the rich and corrupt to take control, it's never good.
Posted by erasmus111 at 11:03 AM : Apr 19, 2009
+ report abuse + permalink

When G.W.Bush decided the real people of the U.S. are not important as the top 2 percent ,the rich in this country, and to give them more as you said, we have trouble right here in river city, also his working with big business ,the greed began, and to heck with the rest of us. Everyone wants Bush and Cheney to pay for the torture they did in the Iraq debacle, I also think what he did to the ordinary people of this country who go to work and try to do the right thing,we are the ones that are paying for all this. Corporations layoff workers and no health care when they are let go. what are they caring about, Wall street I realize Capitalism is what it is all about, but I am tired of seeing this country go down and down because of greed. That is the difference to me. Canada cares about there people's health and keep greed out of the picture, which helps your country to prosper. we could take a lesson from Canada and we can pray never again will a G.W.Bush and Cheney darken our government doors again. I listen to the Right wing republicans today and think when will we learn.

[daffy64]

That;s why so many Canadians come over HERE for care. BTW-it is illegal for a Canadian citizen to pay for health care. Next question?

Posted by janem4 at 10:22 AM : Apr 19, 2009

Oh that's a silly old argument. Our health care is fine. My Mom just got both knees replaced with no additional charges.

Most Canadian like their health care.

[erasmus111]

...any country that is not the US HAS to be better. Right??

Posted by janem4 at 10:24 AM : Apr 19, 2009

Right. : )

I don't want people mad at me for saying that, so I will explain further.

The U.S. used to be all that it claimed to be. Well, mostly anyways. But now, things have changed. Things aren't good right now, and so, yes, it is better in other countries at this point in time. Hopefully things will get better and once again you can claim the title as the best country in the world. : ) When you allow the rich and corrupt to take control, it's never good.

[incog-nito]

The current system needs to go, simply because it is not sustainable. Health care costs have been skyrocketing year after year with no end in sight. Employers have been shifting costs to employees and some do not even offer it. Individual plans are exhorbitantly expensive, and if you have a pre-existing condition they probably won't cover you at all. The employer-driven health insurance scheme is simply stupid. You get what your employer gives you. And if you're out of work, in school, changing careers, or want to retire early, chances are you don't have insurance or it's very expensive. There needs to be at the very least a GROUP plan that is available to people regardless of whether they're working or not.

[erasmus111]

Hmmm..the Canadian Banks seem to have Good Sense...sometimes referred to as "Common" sense. Apparently, it is not all that common!

Posted by filmguy107 at 11:09 PM : Apr 18, 2009

Yes, when I go to my bank, in Canada, I can trust them. I know they are going to stear me in the right direction. They aren't out to get me. They are looking after my best interests.

[curse914]

blitzder-so tell us, where is the present administration "borrowing" money??? Perhaps they are printing the billions, upon billions?? Last I heard, China & India were our primary lenders.
So, it's ok for the chosen one to borrow like crazy, print more money, devalue the dollar and bankrupt our future generations\? You libs need to explain this to us poor right wing extremists.\
skarzpop-evidently you do no live on the Canadian border the way we do. The utopia you libs think universal health care to be is nothing more than rationing. That;s why so many Canadians come over HERE for care. BTW-it is illegal for a Canadian citizen to pay for health care. Next question?

Posted by janem4 at 10:22 AM : Apr 19, 2009

Ronald Reagan said it, Donald Rumsfeld said it, Mussolini said it, "deficits do not matter". Clinton followed in the Deregulation foot steps of the Saint of Deficit spending, Ronney Raygun.

The only form of Socialism that we are reeling from is National Socialism (The Corporate State).

[erasmus111]

ioweign-so, you assume you would have received better care under the Canadian system? Do some research and see how universal health care really works.

Posted by janem4 at 10:27 AM : Apr 19, 2009

Seeing as how you are so smart and know so much about the Canadian system, perhaps you can tell me what that is? I have come across very few that really know how our system works. They tell me they heard it from this person or that person and that they have read this and read that. I don't know what they are reading, but it isn't even close to being right. People like you need to shut the hell up unless you know what you are talking about. WE DON'T HAVE PEOPLE DYING FROM LACK OF HEALTH CARE!

[erasmus111]

That;s why so many Canadians come over HERE for care. BTW-it is illegal for a Canadian citizen to pay for health care. Next question?

Posted by janem4 at 10:22 AM : Apr 19, 2009

WHAT? Illegal for a Canadian citizen to pay for health care? I just read where you said you went to school with Canadian nurses. That has to be a lie then, because we all pay for our health care, unless you make under a certain amount. You most certainly didn't learn that from them. Unless they are all BRAINDEAD.

And there aren't that many people coming to your country for health care. The only ones coming are the rich snots that can't wait a few days. As far as going to a doctor, we can see a doctor the same day! No one in their right mind would go to the U.S. for health care.

[incog-nito]

Simple explanation: Americans CEOs--and Americans in general--follow the golden rules espoused by so many get-rich-quick motivational hawkers: "pay yourself first" and "use other people' money". They make sure they get all the bonuses and and golden parachutes no matter how well the company performs. Their goal is not the welfare of the company but their own. Unlike regular folks, however, CEOs are in fact in a position where they can pay themselves first and use other people's money without consequence. The average Joe tries to look rich by borrowing or using money from their home equity, and got the shaft.

[variant_530]

blitzder --
The money was needed by the banks to cover for the deadbeat liberals who didnt understand their loan docs but signed them anyway. Knowing full well they could not and would not honor their obligation. When they walked away from the mortgage, taking the copper, sink and anything else they could the banks were left holdiong the bag. Just like a liberal.. Its deadbeats like you that caused this mess in the first place.
It is socialist when those with ambition are forced to support dedbeats like you.