Apart from what bloomj31 said, Canada’s banks are also more fascist than those in the United States. They get so much money from the government in interest that they’re practically nationalized.
Canada has the CMHC. It’s a government-run organization that protects banks from defaults on loans they give out. They have really stepped up their operations in the last 2-3 years. More than half of home loans in Canada are backed by a CMHC guarantee against default. Essentially, It’s like Fannie Mae and Freddie Mac with less intensity, but spread over all the chartered banks.
The interest rates have been kept pretty low. Monetization of the debt and huge government spending in the US (relative to that of the Canadian government) over the past 8-10 years has been the reason the Canadian dollar has risen against the US dollar.
The housing market in Canada is at the top of the bubble. Less than a year from now, the Canadian banks will be seeking bailouts by the government.
Canada didn’t have the right rules nor did it have the right policies to prevent a boom/bust cycle from happening. It just so happens that they’re one of the last ones to join the rest of the nations in the bust.
So there is no Community Reinvestment Act type of legislation active here. There is government backing of loans against defaulting, leading the chartered banks to give out loans to almost anyone.
My favorite thing about the bust in the Canadian housing market is that there are no “sub-prime mortgages” to blame. There are no “collateralized debt obligations” to blame. There are no derivatives to blame. There are no “evil bankers” to blame. There is no “deregulation” to blame. All there is to blame is loose monetary policy and government backing of mortgages against default.
We’ve had credit-expansion led boom in housing. Now we’re seeing the start of the bust. ABCT being “experimentally verified” yet again.
^please let it happen… If canada and europe can go down the hole, liberals won’t have any pretend-examples anymore.
The issue isn’t “regulation” or “lack of regulation.” The difference between a driver who gets into a crash and a driver who doesn’t isn’t “driving” per se, it’s quality of driving.
The U.S. has been deregulated for the same reason the remaiing regulation is corruptly enforced; the banks have taken control of the government. Government serves the interests of those who control it very effectively; the citizens of the U.S. no longer control their government while the citizens of Canada and Norway do to a greater extent.
Government is a very useful and powerful tool, why wouldn’t corporations/bank/anyone want to take it over? You can’t create such a strong incentive and expect no one to take the bait.
People fail to see this on purpose, bloomj. They don’t think that concentrating that much power into so few hands is a problem. They think the problem is when people are able to use that power for their own benefit.
In my opinion, the only safe place for power is in no one’s hands. 
@OP: Keep in mind at all times that the “number of bank failures” is not an inverse measure of the health of the banking market. You should challenge this outright since, as long as you accept it as the measure of health, you will lose the argument. It is indisputable that bank failures are all but impossible in a central banking system. They only occur when they are permitted to occur. But that is the very root problem with a central banking system, the protection of bad businesses from bankruptcy. Businesses (banks are just another kind of business) which consistently run losses ought to fail. Banks which do not maintain sufficient capitalization to handle all circumstances, including bank runs, ought to go bankrupt. This is elementary but somehow gets lost in the sophistry of modern politics and the way it glazes over foundational issues of economics, such as money and banking.
Clayton -
According to the Index of Economic Freedom, Canada has more financial freedom than the U.S.
Canada’s Financial Freedom Score: 80
Canada’s financial system provides many options for businesses and competitive services for investors. Credit is allocated on market terms. The “big six” domestic banks account for around 90 percent of total assets; foreign banks, around 8 percent. It has become easier for foreign banks to enter the market, and their regulatory burden has been reduced. Revisions of the Bank Act in 2007 focused on streamlining regulation and enhancing consumer protection. Mergers between large banks are restricted, and large banks may not buy large insurance companies. The largest insurance companies conduct more than half of their business overseas. Securities markets are well developed, but the regulatory system is fragmented. The Montreal and Toronto exchanges merged in May 2008 while maintaining areas of specialization. Banking has weathered the recent financial crisis with no need for an injection of state funds.
United States’ Financial Freedom Score: 70
The U.S. financial sector has undergone drastic changes since the sub-prime mortgage crisis began in mid-2007, substantially reducing economic freedom. Mortgage guarantors Fannie Mae and Freddie Mac were placed in conservatorship. A number of prominent financial firms or banks have failed; government bailouts have kept others afloat; and the government has intruded on firms’ management in unprecedented ways (for example, by setting caps on executive compensation). Despite the turmoil, the U.S. still has one of the world’s most dynamic and developed financial markets. Foreign financial institutions and domestic banks are subject to the same restrictions. Foreign participation in equities and insurance is substantial. Concerns continue over the intrusive nature and cost of the 2002 Sarbanes–Oxley Act, which increased disclosure and internal control requirements to the detriment particularly of small firms.
quote kaley mckibben
Proof that Canada has more regulation: none.
quote solid_choke
According to the Index of Economic Freedom, Canada has more financial freedom than the U.S.
Canada’s Financial Freedom Score: 80
Canada’s financial system provides many options for businesses and competitive services for investors. Credit is allocated on market terms. The “big six” domestic banks account for around 90 percent of total assets; foreign banks, around 8 percent. It has become easier for foreign banks to enter the market, and their regulatory burden has been reduced. Revisions of the Bank Act in 2007 focused on streamlining regulation and enhancing consumer protection. Mergers between large banks are restricted, and large banks may not buy large insurance companies. The largest insurance companies conduct more than half of their business overseas. Securities markets are well developed, but the regulatory system is fragmented. The Montreal and Toronto exchanges merged in May 2008 while maintaining areas of specialization. Banking has weathered the recent financial crisis with no need for an injection of state funds.
United States’ Financial Freedom Score: 70
The U.S. financial sector has undergone drastic changes since the sub-prime mortgage crisis began in mid-2007, substantially reducing economic freedom. Mortgage guarantors Fannie Mae and Freddie Mac were placed in conservatorship. A number of prominent financial firms or banks have failed; government bailouts have kept others afloat; and the government has intruded on firms’ management in unprecedented ways (for example, by setting caps on executive compensation). Despite the turmoil, the U.S. still has one of the world’s most dynamic and developed financial markets. Foreign financial institutions and domestic banks are subject to the same restrictions. Foreign participation in equities and insurance is substantial. Concerns continue over the intrusive nature and cost of the 2002 Sarbanes–Oxley Act, which increased disclosure and internal control requirements to the detriment particularly of small firms.
I think these two posts sum it up nicely. Why everyone assumes that the US economy is more free than all others is beyond me.
It was the central bank, not the general banking sector, that caused the meltdown. Regulations are unlikely to have stopped it, and even if they could have, asking the same entity that inflates to close the valves and stop the inflation before it does any damage is a little silly.
During the Great Depression, American banks were subject to all kinds of regulations, even stopping them from opening new branches. Canadian banks did not have this onerous nonsense to deal with… and consequently not a single Canadian bank failed.
Also, I think this begs the question: are Canadian banks more highly regulated? I wouldn’t be surprised either way.