According to a recent news update from the Canadian business, the near bankruptcy of Home Capital Group Inc. was never handled by Ottawa well.
It seems like Canada needs to hear more from the authorities than just a mere simple statement. “The authorities behaved like it was 1996, the last time a Canadian financial institution failed. They said little in public, while reportedly doing all sorts of prudent things behind the scenes,” noted the business news.
Carolyn Wilkins, the No.2 at the Bank of Canada, in a press conference at June 8, finally states out all the reasons why a national housing meltdown is so remote.
“It’s quite tempting to draw parallels” with the U.S., Wilkins said. “Yet when understand what really led to the severity of the financial stress in the U.S., which actually went global in 2008 and 2009, it was related to a number of factors that are not present in Canada,” she said.
But apparently, none of what Wilkins said was enough revelations, thought it needed repetition.
The list of factors that make Canada different from the U.S. in 2006 and 2007 is long. “These factors: American lenders were giving money to anyone, whereas Canadians must do much more to prove they can afford their payments; delinquency rates in Canada are extremely low; and Canadian laws punish anyone who tries to walk away from a loan, meaning “households have a greater incentive to hang on,” Wilkins said. “We have much less securitization, it’s public and it’s plain Jane.”
The reason for the press conference was for the release of the Bank of Canada’s twice-a-year Financial System Review [FSR]. A readable document that the Central bank uses to wave down weak spots in the circulation of cash and credit.
But concerns by Canada’s chief economic stewards about dept. and home prices in the greater Toronto and Vancouver area. They are afraid that housing prices in these areas could downturn because values long ago broke their tether with fundamentals. Yet, if that came to pass, the central bank thinks the damage would be regional and not national.