Once again, our banks impress Canadians with their razor-sharp instinct for exactly the wrong action at the wrong time.
First it was responding to the Bank of Canada lowering interest rates by jacking up the mortgage rate.
Now, on the heels of a $50-billion taxpayer bailout to ensure liquidity in the banking industry, TD Bank decides to hike interest payments on credit cards.
The bank's explanation is precious: “'The changes align with the pricing practices of our competition,' a TD spokesperson said.”
So let me get this straight…
Banks go on a ten-year tear of easy credit and increasingly risky investments to fuel immodest profits and inflate shareholder value.
When the bubble bursts, taxpayers fork over $50-billion to the banks to ensure that they can continue to keep lending money to small businesses and individuals and not seize the entire economy up.
Then the banks turn around and do the opposite: They make credit tighter for the most vulnerable customers they have, moving interest rates that already border on usury to even higher levels of mistreatment.
And their only excuse is “all the other guys are doing it, Mom!”
I am by no means a populist. I think banks are a critical and positive institution in our economy and our society.
But bad judgment happens to the best of us.
And large organizations are prone to irrational decisions.
In this case, the signals from the top to reduce risk at all costs are running counter to the spirit, if not the terms, of the government's bailout.
Perhaps Frank McKenna's much vaunted political instincts will kick in right about now and he will advise the board to remove their heads from their posteriors.
