House of Commons Debates VOLUME 146 Ï NUMBER 073 Ï 1st SESSION Ï 41st PARLIAMENT OFFICIAL REPORT (HANSARD) Friday, February 3, 2012 Speaker: The Honourable Andrew Scheer CONTENTS (Table of Contents appears at back of this issue.) 4819 HOUSE OF COMMONS Friday, February 3, 2012 The House met at 10 a.m. For the information of members and Canadians watching at home, the current five year review was launched on September 20, 2010 when the Minister of Finance initiated an open public consultation process on how to improve our financial system. Prayers [Translation] Ï (1000) Here in Canada, the financial sector plays a key role in fostering [English] financial stability, safeguarding Canadians' savings and fuelling economic growth and productivity. Aside from the fact that these HOUSE OF COMMONS institutions offer essential services worldwide, the industry employs The Deputy Speaker: I invite the House to take note of today's over 750,000 Canadians. It represents about 7% of Canada's GDP use of the wooden mace that you see on the table. The wooden mace and is known for its use of information technology. is traditionally used when the House sits on February 3 to mark the anniversary of the fire that destroyed the original Parliament Not only are our banks the foundation of our economy, but their buildings on this day in 1916. strength and stability are a model for the entire world. Unlike the United States, the United Kingdom and other European countries, we did not have to nationalize, bail out or buy stock in our banks. In GOVERNMENT ORDERS fact, for the fourth year in a row, the World Economic Forum has stated that Canada has the soundest banks in the world. The [English] Financial System Review Act will help to ensure that our banks remain strong and effective and that they adapt to the new realities of FINANCIAL SYSTEM REVIEW ACT an evolving global marketplace. Hon. Vic Toews (for the Minister of Finance) moved that Bill S-5, An Act to amend the law governing financial institutions and to [English] provide for related and consequential matters, be read the second time and referred to a committee. As the Canadian Life and Health Insurance Association has noted, the act represents a welcome fine tuning of the various financial institution statutes. Mrs. Shelly Glover (Parliamentary Secretary to the Minister of Finance, CPC): Madam Speaker, I welcome the opportunity to To effectively describe the benefits of this proposed legislation to open debate at second reading of Bill S-5, the financial system the House it is worth revisiting our government's response to recent review act. financial volatility. This proposed legislation matters to Canadians because it Beginning in 2007 and through 2008, turmoil in global markets concerns one of the most fundamental drivers of our economy, the revealed serious weakness in the international financial system. financial services sector. Around the world many major financial institutions failed and Before I go any further I would like to note that the proposed needed to be bailed out by governments at the expense of taxpayers, legislation is in fact mandatory. Every five years, the government is but not here in Canada. Thanks to sound regulation by our bound to review the statutes that govern federally regulated financial Conservative government, not one single bank failed and not a institutions to maintain the safety and the soundness of the sector, single bailout was necessary, making Canada a model for the world. while ensuring that Canada remains a global leader in financial services. Listen for example to the words of U.K. Prime Minister David Cameron who praised our banking system on a recent visit to The Canadian Bankers Association has remarked that its members Canada: “believe strongly in the importance of ensuring that the legislative and regulatory framework is reviewed regularly”. As the last review In the last few years, Canada has got every major decision right. Look at the facts. Not a single Canadian bank fell or faltered during the global banking crisis... Your was conducted in 2007, the Bank Act requires that this be completed economic leadership has helped the Canadian economy to weather the global storms this year. far better than many of your international competitors. 4820 COMMONS DEBATES February 3, 2012 Government Orders The Irish Times also declared that Canada's “strict banking review, we found that only a few minor adjustments are now supervision was a reason why it was one of the world's strongest necessary. performers during the recession”. Numerous detailed and thoughtful submissions were received The International Monetary Fund also said it “commended from various stakeholders, including industry associations, financial Canada's strong financial regulation and supervision. This has institutions, consumer groups and individual Canadians. I am resulted in a stable and resilient banking sector, which has resisted pleased to announce that the participants were satisfied with the the international financial crisis well and remains well prepared to process. deal with most adverse scenarios”. Ï (1010) A U.S. Congressional Research Service report added that [English] “Canada's financial system in particular is garnering attention, because it seemed to be more resistant to the failures and bailouts The Canadian Life and Health Insurance Association stated at the that have marked banks in the United States and Europe”. Senate committee on banking, trade and commerce, which completed its study of this bill late last year, that: Even so, we have responded to the crisis with quick action to The consultation process was very positive and reflected the technical nature of ensure the long-term stability of our financial system. this review. Ï (1005) From these consultations, we received a number of excellent [Translation] proposals for fine-tuning, clarifying, harmonizing and modernizing First, in budget 2008, the government ensured that the Bank of the existing framework. Our government has listened and is Canada had modern, appropriate tools to enhance the stability of the committed to doing just that with the proposals contained in the financial system when necessary. In fact, the Bank of Canada used bill before the House today. these improved tools to protect our financial system, particularly by The current framework works well. Canada's financial system redistributing liquid assets to financial institutions, which was key to continues to be recognized as one of the soundest in the world. With preserving the flow of credit to Canadians and businesses during the that in mind, I will outline the key measures contained in Bill S-5 for so-called credit crunch. members and Canadians watching at home. I remind them that this is In budget 2009, the Conservative government also strengthened very technical in nature. I hope that they will be able to understand the authority of the Canada Deposit Insurance Corporation, or CDIC. the measures I will outline. This enhancement gave CDIC a broader range of tools to provide financial assistance to troubled financial institutions, thus promoting The proposed legislative package includes measures that will: stability and protecting Canadian's deposits. respond to changes in the sector; ensure access to banking services for all Canadians; level the playing field by promoting co-operation [English] among our financial institutions; improve the efficiency of our We also took steps to protect our mortgage market. The American system; and, finally, clarify the intent of existing legislation. sub-prime mortgage crisis, and the recession which followed, Among the examples, to better respond to changes in the sector, illustrate the importance of a stable and well functioning housing our government is improving the ability of regulators to share market. information efficiently with their international counterparts. In Canada, our system of mortgage insurance ensures that real Also, to keep pace with the growing global financial sector we are estate remains stable. In order to protect it from the dangerous increasing the widely held ownership threshold for large banks from excesses experienced by other countries, our government has acted $8 billion to $12 billion. three times to adjust the mortgage guarantee framework. These adjustments included reducing the maximum amortization period to To ensure universal access to banking services, the legislation 30 years from 35 years for government-backed insured mortgages clarifies that all Canadians, including bank customers, are able to with loan-to-value ratios of more than 80%. We also reduced cash government cheques under $1,500 free of charge at any bank in borrowing limits for refinancing and withdrew government insur- Canada. ance from home equity lines of credit. To better protect consumers, we will enhance the supervisory In budget 2011, our government announced that we would give powers of the Financial Consumer Agency of Canada by increasing the current rules on the mortgage insurance framework a basis in the maximum penalty for a violation of a consumer provision, legislation. This would further promote financial stability. We are consistent with penalties for other violations under financial actively developing this framework. institutions statutes. To improve efficiency, the Superintendent of [Translation] Financial Institutions will have the authority to issue a certificate to assist financial institutions in documenting incorporation informa- As you can see, the government has not been idle since the last tion. financial institutions legislative review in 2006. We have renewed many key elements of our financial system and bolstered it by I am especially pleased with the responsiveness of S-5's measures adding new tools to ensure its stability. It is perhaps because of these to promote co-operation among our financial institutions. I would changes that, during the consultations conducted during the 2011 like to highlight them now. February 3, 2012 COMMONS DEBATES 4821 Government Orders For instance, federal credit unions will vote with the co-operatives The measures proposed in the financial system review act will class in the governance of the Canadian Payments Association.