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A Call For Higher CDIC Limits !
March 24, 2023
6:38 am
cgouimet
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savemoresaveoften said

Indeed. Labeling ‘bail out’ attracts attention and suits the general public who hates bank just for the sake of hating banks. And when CCPA says so, it must be real too….  

Black & White labelling is very easy, makes for better headlines and encourages polarization.

Grey Scale thinking is much more difficult but encourages thoughtful, intelligent and friendly dialogue/discussion.

CGO
March 24, 2023
6:52 am
Bill
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As soon as I saw the CBC link, and then on top the CCPA reference at the beginning, time to stop reading as I could complete the article without reading it. Very important to be aware of biases of sources, on any part of the spectrum.

Big difference between bailout and providing liquidity, the latter is done regularly to keep things moving during crises, as we've seen regularly over recent years.

Lesson I learned as a young person was in my lifetime Canada's big banks aren't going to be allowed to go anywhere, for various reasons, so load up on their shares. Was a good move, not sure I would advise today's young the same though as they seem to want to change everything up these days.

March 24, 2023
7:21 am
savemoresaveoften
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Bill said
As soon as I saw the CBC link, and then on top the CCPA reference at the beginning, time to stop reading as I could complete the article without reading it. Very important to be aware of biases of sources, on any part of the spectrum.

Big difference between bailout and providing liquidity, the latter is done regularly to keep things moving during crises, as we've seen regularly over recent years.

Lesson I learned as a young person was in my lifetime Canada's big banks aren't going to be allowed to go anywhere, for various reasons, so load up on their shares. Was a good move, not sure I would advise today's young the same though as they seem to want to change everything up these days.  

+1

With all the expansion down south in the last 10-15 years as a way to grow for the Canadian banks, they are not as solid as they used to be.
Back in the late early 90s when I started working, Cad banks were the most boring stocks to own and stock prices went nowhere. That was the golden time to load up.

But they are still the safest banks to own globally esp for dividend income purpose, just don’t expect the same returns we had seen.

March 24, 2023
7:33 am
phrank
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cgouimet said

Black & White labelling is very easy, makes for better headlines and encourages polarization.

Grey Scale thinking is much more difficult but encourages thoughtful, intelligent and friendly dialogue/discussion.  

You make an excellent point that people should think about. It's no different than how the mindless drones label every opinion differing from themself as left or right. Whichever is more suitable to their point of view. Come to think of it, they should start calling different opinions than their narrow points of view north or south. That would fit even more into the polarization agenda sf-laugh!

March 24, 2023
7:42 am
mordko
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Gents, you argument isn’t with me. Its with the dictionary.

“ A bailout is when a business, an individual, or a government provides money and/or resources (also known as a capital injection) to a failing company. These actions help to prevent the consequences of that business's potential downfall which may include bankruptcy and default on its financial obligations.

Businesses and governments may receive a bailout which may take the form of a loan, the purchasing of bonds, stocks or cash infusions, and may require the recused party to reimburse the support, depending upon the terms.”

https://www.investopedia.com/terms/b/bailout.asp

And this is exactly what happened. Now… When someone is raving about the messenger, “left”, “right”, and predicts a crash on a specific date, that’s fine. My problem is when the banks themselves and their employees are arguing with the dictionary. That makes me worry about transparency, honesty and trustworthiness.

March 24, 2023
7:48 am
cgouimet
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phrank said

You make an excellent point that people should think about. It's no different than how the mindless drones label every opinion differing from themself as left or right. Whichever is more suitable to their point of view. Come to think of it, they should start calling different opinions than their narrow points of view north or south. That would fit even more into the polarization agenda sf-laugh!  

I like to read/hear different points of view. It helps me understand where those views are coming from and helps me evolve my own thunking. We all have the ability to age gooder if we so choose.

CGO
March 24, 2023
8:01 am
savemoresaveoften
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mordko said
Businesses and governments may receive a bailout which may take the form of a loan, the purchasing of bonds, stocks or cash infusions, and may require the recused party to reimburse the support, depending upon the terms.”

Except none of those took place with BMO, CIBC nor BNS at the time.

Also there is the definition that the business must be in a pending collapse state, and none of us knew in reality if those 3 mentioned names were or not.

Most will also forgot or never realized that even some of the strongest US banks at the time WERE FORCED to borrow more CASH from the Fed to bolster their capital, whether the banks asked for it or not. So we now said the Fed bailed those banks out too ??

March 24, 2023
8:17 am
mordko
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They got cash, loans and guarantees in exchange for troubled mortgages both sides of the border to the tune of hundreds of billions. This was done for a reason. They were technically bankrupt at the time and whether we knew it or not is irrelevant. Evidence is in the report. The value of taxpayer support exceeded the value of banks.

Are you saying Canadian banks (subject of this discussion) didn’t want any of this but were forced to take taxpayer cash and transfer the risk to taxpayer by the government? One can make all sorts of random claims like that. Evidence?

March 24, 2023
8:47 am
mordko
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And going back to the definition of bailout, all of the following took place, except “stocks”.

“ may take the form of a loan, the purchasing of bonds, stocks or cash infusions”.

March 24, 2023
9:13 am
agit
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It is not bailout ok... so it is "liquidity support" 🙂 - (in the U.S it is "liquidity programs" source The Federal Reserve.)

2009 - The federal government claims it was offering the banks ‘liquidity support' source the CAD FED GOV

2009- Bank of Canada Introduces Further Measure to Provide Liquidity to the Canadian Financial System Consistent with its commitments under the G7 Plan of Action, the Bank of Canada announced on 14 October measures to provide exceptional liquidity to the Canadian financial system. Further to these measures, the Bank today announced plans for a Canadian Dollar Term Loan Facility (TLF). source BOC

2008-2009 CMHC allowed Canadian banks to transfer the risk on over $90 billion of previously uninsured mortgages from their balance sheets on to Canadian taxpayers

March 25, 2023
8:01 am
Norman1
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agit said

2008-2009 CMHC allowed Canadian banks to transfer the risk on over $90 billion of previously uninsured mortgages from their balance sheets on to Canadian taxpayers 

Quoting a Maclean's article the cites that same Canadian Centre for Policy Alternatives garbage proves nothing.

An insured mortgage is an insured mortgage. Doesn't matter if the mortgage wasn't insured originally because the down payment was more than 20%.

CMHC didn't allow anything. Anyone can pay the mortgage insurance premium later, while the mortgage and borrower still qualifies, to insure the mortgage.

People pay for unnecessary mortgage insurance all the time. With 35% down, the insurance premium is a one-time 0.6% fee. Insuring the mortgage can reduce the rate by 20 to 30 bps per year. That's 33%+ per annum return on the insurance premium!

The Insured Mortgage Purchase Program was not fully utilized and eventually fizzled out. That's because, once regular market conditions returned, the banks could resume selling insured mortgages to investors at a premium instead of selling them to the government program at a discount.

As I said before, don't believe the CCPA lies.

March 25, 2023
8:18 am
mordko
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Yes, its all the market conditions fault. Mortgage securities were unfairly priced. Transferring risk to taxpayer and getting their cash should be free. Lehman, Credit Suisse and SVB executives agree with their counterparts at Canadian big banks.

March 25, 2023
9:46 am
savemoresaveoften
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mordko said
Yes, its all the market conditions fault. Mortgage securities were unfairly priced. Transferring risk to taxpayer and getting their cash should be free. Lehman, Credit Suisse and SVB executives agree with their counterparts at Canadian big banks.  

Your position on this is clear and nothing will change your mind.
At the same time, some CCPA claims and misrepresentation won’t change mine and a few others either. Does not mean we are right, definitely don’t mean what u believe and said was true either.

Both sides will continue to believe what each think is correct, even tho it’s at polar extreme.

March 25, 2023
7:56 pm
James
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Bill said

Lesson I learned as a young person was in my lifetime Canada's big banks aren't going to be allowed to go anywhere, for various reasons, so load up on their shares. Was a good move, not sure I would advise today's young the same though as they seem to want to change everything up these days.  

My dad used to say this all the time and you both were right. I wonder if the same will hold going forward. What would you tell today’s young to do?

March 26, 2023
1:01 am
RetirEd
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Yes, the Canadian banking system is considered one of the safest in the world. And the Titanic was just about the safest ship in the world.

So, are you going to let go of the wheel in an autopiloting Tesla?

Thought not. Those curves have long tails, thin as they be.
ReirEd

RetirEd

March 26, 2023
5:15 am
Bill
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James, I don't give advice to anyone about finances as unfortunately (which in real life I keep to myself) I see capitalist civilization soon ending on this continent and in Europe, no idea how you make money or keep your money in whatever's coming next. So my usual answer is along the lines of "good question, not really sure, what do you think?"

Sorry to be unhelpful but I'm sure there are other folks here or other "elders" in your life who are happy to offer cheerier, constructive financial advice to young people like you.

March 26, 2023
5:34 am
mordko
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RetirEd said
Yes, the Canadian banking system is considered one of the safest in the world.   

Indeed this statement is often repeated by said banks, our government and their regulators. Funny thing: Swiss banks and government used to make the same claim. “Best in the world”. They were SO proud.

On a somewhat more objective measure the likes of CIBC are ranked as AA- by Fitch which isn’t too bad but there are AAA ranked banks outside Canada.

March 26, 2023
5:56 am
canadian.100
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mordko said

On a somewhat more objective measure the likes of CIBC are ranked as AA- by Fitch which isn’t too bad but there are AAA ranked banks outside Canada.  

Which banks are rated AAA?
I might be interested in those as an investment. Thanks.

March 26, 2023
6:00 am
agit
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Norman1 said

agit said

Quoting a Maclean's article the cites that same Canadian Centre for Policy Alternatives garbage proves nothing.

As I said before, don't believe the CCPA lies.  

Yes the Gov of Canada "bailout' or "liquidity support" or "liquidity programs"

Bank of Canada Introduces Further Measure to Provide Liquidity to the Canadian Financial System

link to BOC notice Wednesday, November 12, 2008, 08:00 (ET) and Tuesday, October 14, 2008, 09:00 (ET)

https://www.bankofcanada.ca/2008/11/bank-canada-introduces-further-measure-provide-liquidity/

https://www.bankofcanada.ca/2008/10/part-g7-action-plan-bank-canada-introduces-new-measures-provide-liquidity/

BOC rule
Provision of liquidity to the financial system
The Bank of Canada is the ultimate source of liquid funds to the financial system, and serves as the system’s “lender of last resort.”

March 26, 2023
6:29 am
mordko
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canadian.100 said

Which banks are rated AAA?
I might be interested in those as an investment. Thanks.  

https://www.gfmag.com/magazine/november-2022/worlds-safest-banks-2022

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