| The Canadian government should disallow the mergers of Canada’s big banks and instead adopt legislation that requires banks to invest in community job-creation opportunities and equitable service, says a national lobby group.
Those comments from Duff Conacher, chair of the Canadian Community Reinvestment Coalition, come on the heels of a Senate report that says a limited number of mergers among Canada’s top banks would benefit the country.
Conacher says banks larger than Canada’s big five tend to focus more on large clients at the expense of service to everyday Canadians. He adds that Canadian banks have already lost billions of dollars in bad overseas lending deals, and citizens should be shielded from more bad deals that will come with mergers.
"It’s not (the banks’) money, it’s our money," Conacher says. "They’ve lost billions in the last two years, then they gouge us to make up for the loss through credit card interest rates… and service charges. They’re gouging us to make up for their stupidity."
Conacher says the fact that credit card interest rates haven’t fallen along with mortgage and lending rates is evidence that banks aren’t acting in the interest of Canadians.
He suggests that Canada should adopt legislation similar to the United States’ Community Reinvestment Act, a 25-year-old law under which federal regulators monitor how well individual banks serve their communities. Approval for banks to grow and merge is dependent on quality and equitable service.
The Senate report, however, paints a different picture. It says mergers would strengthen Canada’s banks and its economy, provided the public interest is safeguarded.
"The committee is of the opinion that bank mergers are a valid business strategy, and that they would contribute to Canadian growth and prosperity," the report concludes.
It also says the decision to allow bank mergers should not be a political one, like the 1998 Liberal government scuttling of two proposed mega-mergers between banks.
Banks have lobbied hard since 1998 for the right to merge, but other groups have also spoken out against it. The Canadian Federation of Independent Business told the Senate committee that greater competition, rather than consolidation, would truly benefit Canadians.
Conacher says he’s worried the Liberal government will be unduly influenced by political contributions from Canada’s banks, and business ties between Senators who wrote the report and major banks.
"Mergers should not be allowed unless we want less service and want them to be lending money to multinational corporations that are largely taking over other companies – that leads to global job losses," he says. "If (the government) is going to listen to five big bankers over the will of 20 million consumers, we need to throw them out because they aren’t serving us." |
