Hey there, time traveller!
This article was published 3/1/2010 (4141 days ago), so information in it may no longer be current.
OTTAWA -- In the coming months, you'll be hearing more from a powerful public servant you probably don't know, who heads a largely unknown office.
But don't expect to hear much more from Julie Dickson, superintendent of financial institutions, whose job is to supervise and regulate federally registered banks and insurers, trust and loan companies as well as private pension plans subject to federal oversight.
Unlike the Bank of Canada governor, who talks all the time, Dickson's job is to advise the finance minister, who is expected to do all of the talking that's necessary.
She will be in the limelight a bit more in 2010 because she's involved in this year's biggest task: working with the G20 and others to strengthen international regulations for financial institutions to help prevent recessions such as the one that smashed us in 2008.
Her work on this file is recognition that to be effective, financial regulations must be global because our banks are competing with those in America, Europe and elsewhere.
The Americans don't have a body such as our Office of the Superintendent of Financial Institutions, but some legislators would love to have one, and a bill proposing an organization similar to OFSI is now before Congress.
In a background paper, the OSFI says it "must allow financial institutions to take reasonable risks and compete effectively both at home and abroad, while at the same time safeguarding the interests of depositors, policy holders, benefactors and pension plan members.
"Our goal is to balance competitiveness with stability and international rules with Canadian market realities."
Established in 1987, the OSFI has 490 employees in offices in Ottawa, Montreal, Toronto and Vancouver.
A big plus for Canada is that our banks seem to understand their national responsibilities. We have six major banks and a branch banking system. America has thousands of banks, which means the small ones have to take more risks just to survive. Since the start of the recession, America has had 150 bank failures. Canada has had none.
More numbers to consider: During the recession 711 banks and other lenders in America received $250 billion directly from the federal government; the U.K. government put more than $125 billion into its banks; The Netherlands almost $53 billion; France $26 billion; Ireland $15 billion and Germany $107 billion in a set-aside.
Canada's figure: Zero.
In 2008, the recession's worst year, our banks paid $3.4 billion in taxes. More than that, from about the second quarter of 2008 through the first quarter of 2009, bank lending grew at a double-digit rate, a key factor because many other sources of credit had dried up. Obviously, Prime Minister Stephen Harper's much-ballyhooed "action plan" wasn't the only measure that got us out of the dumpster.
You can easily see the differences between American and Canadian banking by looking at President Barack Obama's speech on banking last month. He has to prod and cajole banks. "America's banks received extraordinary assistance from American taxpayers to rebuild their industry," he said, "and, now that they're back on their feet, we expect an extraordinary commitment from them to help rebuild our economy."
The last of the banks are now set to repay their loans under the Troubled Asset Relief Program, raising fears that the president will lose what little clout he has over them.
Banker's bonuses have been a big bone of contention in America. In Canada, Finance Minister Jim Flaherty simply said he expects our banks to follow the G20 guidelines. And, he added, the OSFI is going to monitor compliance. "We fully expect compliance," he said.
The OSFI's real challenge in 2010 will be the international talks on financial reform. Dickson says there should be a recognition that no institution is "too big to fail." Companies with that designation take too many chances. As well, more banks in the world should adhere to Canada's rules on leverage and capital.
A closing note: For those of us who follow such matters, it's grand to see the OSFI headed by a woman. Dickson was acting superintendent when she got the top job in 2007. She's not alone in Ottawa's financial hierarchy. Melanie Aitken is the feisty head of the Competition Bureau, one of our most powerful regulators and Karen Kinsely is president and chief executive of Canada Mortgage and Housing, the key player in our mortgage market.
Welcome to 2010, people.
Tom Ford is managing editor of The Issues Network