The argument we seem to be hearing from the Republicans and the Big Banks...

[kentuck]

seems to be that they are "too big to fail" because, otherwise, they could not compete with the "too big to fail" banks in Europe and throughout the world in this new global economy? Just because European banks are too big and are doomed to failure should not mean American banks should do the same. They should be broken up.

[eleny]

1. Are Canadian banks too big to fail or too small to compete with Europe?

The Canadian economy didn't tank, so they might be doing something right. Maybe we ought to be doing something similar.

[JBoy]

2. Canadian banks are more tightly regulated than US banks

and didn't get into the same difficulties on home mortgages. A few reasons:

- mortgage interest isn't tax deductible in Canada, so there's not the same incentive to borrow;
- Canadian banks generally don't offer no-money-down mortgages, or teaser-rate mortgages;
- low down-payment mortgages are insured by a federal institution;
- Canadian banks tend to keep their mortgages, rather than bundle and sell them. They know their customers.

In fact recently, the banks actually lobbied the federal government to tighten up restrictions on mortgages. The new rules require:

- all borrowers must meet the standard for a 5-year fixed mortgage, even if they're getting a short term variable mortgage;
- minimum 20% down, rather than 5% down to qualify for mortgage insurance;
- refinancing a mortgage can only be to 90% of the house's value, rather than 95%.

All this makes Canadian banks very stable, predictable businesses.

[eleny]

3. I remember when some of those criteria were used here

[JDPriestly]

4. Some of the large, European banks are owned in part by the

governments of the countries in which they are located. Those governments watch them pretty carefully.