The conventional line has been, no. Our banks were strong. Unlike the US and Europe, no bailout was needed to deal with the global financial crisis of 2008.
This line, of course, always conveniently neglected the Extraordinary Financing Framework, or dismissed it as trivial.
Now Finance Minister Flaherty – seeking new powers to turn down foreign investments by our banks – has clarified the situation, as reported in the Globe:
Unlike the United States and Europe, the Canadian banking sector has survived the global financial crisis largely unscathed as not a single Canadian bank has gone under. Yet Mr. Flaherty noted the Canadian government did step in to help the banks at the onset of the crisis.
“Ultimately, it all leads to Ottawa doesn’t it?” he said. “If you look at what happened in 2008, we guaranteed the wholesale debts of the banks, we purchased insured mortgages from them. These were all decisions taken here by the government in co-operation with the Bank of Canada.”
So, the Canadian banks needed a helping hand from the government in the form of guarantees and asset purchases to weather the storm. In short, a bailout. Which is why the Minister wants powers to shape bankers decisions, in case he has to do it again.
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