Canada's biggest banks accepted tens of billions in bailout funds during the recession, according to a report released today by the Canadian Centre for Policy Alternatives.
Canada's banking system is often lauded for being one of the world's safest. But an analysis by CCPA senior economist David Macdonald found that Canada's major lenders were in a far worse position during the downturn than has ever been previously believed.
Macdonald pored over data provided by the Canada Mortgage and Housing Corporation, the Office of the Superintendent of Financial Institutions and the big banks themselves for his report published Monday.
It says support for Canadian banks reached $114 billion at its peak. That works out to $3,400 for every man, woman and child in Canada, and also to seven per cent of Canada's gross domestic product in 2009.
The figure is also 10 times the size of the amount Canadian taxpayers spent to bail out the auto industry in 2009.
One of the most well-known ways in which policymakers helped the banks during the crisis is through a $69-billion CMHC program whereby the housing agency took mortgages off the balance sheets of big Canadian banks.
"The federal government claims it was offering the banks ‘liquidity support,’ but it looks an awful lot like a bailout to me," says Macdonald. "Whatever you call it, Canadian government aid for the country’s biggest banks was far more indispensable than the official line would suggest.
"The support for Canadian banks was much more substantial than Canadians were led to believe," Macdonald said.
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