Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

Mark Carney, the governor of The Bank of Canada, leaves a news conference in Ottawa, April 18, 2012.

PATRICK DOYLE/PATRICK DOYLE/REUTERS

Canada's big banks received billions in support from the federal government and the Bank of Canada during the 2008-09 financial crisis, a report by the Canadian Centre for Policy Alternatives says.

"While these funds were repaid in full, it is clear that the banks benefited enormously from public financing when private funds were unavailable," wrote David Macdonald, author of the report released Monday.

"In addition, had the rapid and enormous deployment of public funds not been available, most, if not all, Canadian banks would have encountered serious difficulty."

Story continues below advertisement

The left-leaning think-tank estimated the country's largest financial institutions borrowed nearly $75-billion in short-term collateralized loans from the Bank of Canada and the U.S. Federal Reserve, peaking at $41-billion and $33-billion respectively.

The banks also sold a total of some $69-billion worth of insured mortgage-backed securities to the government, the report estimated.

The Canadian Bankers' Association dismissed the report Monday. "They're completely missing the point," the CBA, an industry trade group, said in an email, according to Dow Jones Newswires. "They seem to be implying that liquidity support is the same as a bank bailout and this is not the case."

Funding measures were put in place to ensure credit was available to lend to businesses and consumers to help the economy through the recession, not because the banks were in financial difficulty, the CBA said.

The Centre for Policy Alternatives based its report on information provided by Canadian public institutions and analysis of the banks' financial reports.

The report noted that much of its work was based on estimates because the federal government and the Bank of Canada have refused requests for a detailed accounting.

"A healthy financial system cannot be based on massive government support for which the details remain secret," the report said.

Story continues below advertisement

"It is only through an honest and transparent examination of what occurred and how it can avoided in the future that a stronger financial system can be built, which is in everyone's best interest."

Ottawa has said repeatedly that Canada has one of the soundest banking sectors in the world and the country's banks did not require a bailout during the 2008-09 financial crisis.

However, the banks did receive help from Bank of Canada programs to make borrowing money easier and CMHC's insured-mortgage purchase program that helped the banks raise cash.

Finance Department spokesman Chisholm Pothier said the government extended financing to the Canadian banks, not subsidies, to allow them to continue to provide credit to businesses and consumers during the crisis.

"The credit was extended at competitive interest rates to protect taxpayers. Financial institutions accepting this credit paid interest on the loans," Mr. Pothier said.

"Not only did these measures play an important role in supporting Canadian business during the credit crunch, they also made money for Canadian taxpayers."

Story continues below advertisement

"I would personally not put much credence in this report," Steve Foerster, a finance professor at the University of Western Ontario, said after reviewing the CCPA report. "It will have zero impact on Canada's reputation as a country with a strong central bank and a well-managed banking system with careful oversight," he told Dow Jones Newswires.

In the U.S., Congress authorized $700 billion (U.S.) for the bailout of financial companies and auto makers during the financial crisis under its Troubled Asset Relief Program, or TARP.

A report last week found that the U.S. government is still owed $118.5-billion including $14-billion that has been written off or otherwise lost.

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies