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Conspiracy Brewing: Canadian Banks Received Government Bailout Greater Than They Were Worth!

According to David MacDonald, a senior economist at Ottawa’s Canadian Centre for Policy Alternatives, major Canadian banks received more financial support from the government between 2008 and 2010 than they were worth! More than 100 billion dollars were paid out to banks to relieve these institutions of unmarketable mortgage securities, in order to help them maintain their liquidity.

Some in the financial community have criticized Mr. MacDonald for referring to these financial supports as “bailouts” and hence creating a story out of nothing. In their opinion, a typical bailout is like what happened in the US where Washington invested in overvalued securities which were dominated by subprime mortgages that had been handed out; here on the other hand, the government ‘rewarded’ the banks for being managed well and weathering the storm of the worldwide financial crisis.

One critic, UofT Professor Laurence Booth, calls this “conspiracy” thinking saying: “The banks have the right to borrow under the standing liquidity facility and/or the emergency liquidity facility from the Bank of Canada. This provides purchase and resale agreement (PRA) financing with securities determined as eligible by the Bank of Canada,”

The beneficiaries of the so called ‘bailouts’ were CIBC, Scotiabank and BMO.

What are your thoughts on this issue?

source: IPSnews.net

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