Throughout the 2008-2010 financial crisis, Canadian banks were touted by the federal government—and the banks themselves—as being much more stable than other countries’ big banks. Canadians we assured that our banks needed no bailout. However, CCPA’s latest study, The Big Banks’ Big Secret: Estimating Government Support for Canadian Banks During the Financial Crisis, suggests that this was not the case.
The study reveals that Canada’s banks received $114 billion in cash and loan support from both the U.S. and Canadian governments during the 2008-2010 financial crisis. The study estimates that at some point during the crisis, three of Canada’s banks—CIBC, BMO, and Scotiabank—were completely under water, with government support exceeding the market value of the bank.
Due to government secrecy, the study raises more questions than it answers and calls on the Bank of Canada and CMHC to release the full details of how much support each Canadian bank received, when they received it, and what they put up as collateral.
Click here to read the full report.
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— Polly Ng, Next Up graduate