Adam's Ideas

I remember when I was still in high school when the major banks of Canada were screaming for the opportunity to go international in ways they weren’t allowed. At the time I was thinking that the banks were just really greedy (greedy banks – shocking ) and were planting the seeds of their own destruction. The rule change would allow the banks to invest in crazy foreign schemes and be bought out by larger international banks.

That would’ve been the end of Canadian economic sovereignty, and luckily, Paul Martin (as finance minister) said a big fat NO to the banks.

Now, there’s an educated analysis of what was going on at the Progressive Economics Blog called the Left was Right:

My personal theory as to why the Canadian banking system survived the great global financial crisis relatively unscathed is that calls by the big Canadian banks in the late 1990s to allow mergers were successfully resisted. Had the big banks been allowed to merge to pursue their global ambitions, they would have ramped up their US and high risk foreign operations considerably, and the cozy, profitable, risk-averse Canadian banking oligopoly would have been broken up by the quid pro quo for mergers – allowing foreign takeovers of Canadian banks. The Liberal Government decision to effectively prohibit bank mergers – despite massive pressure from the big banks – effectively maintained a national financial system under widespread Canadian ownership, and thus subject to national regulatory oversight and control. Much of the credit goes to the popular movements which fought for bank regulation, not to the government regulators who largely bought into the financial sector arguments for deregulation.