Paul Volcker: The Banking World Needs More Canadas

National Post ^ | 17 February 2009 | Kelly McParland

[Publius]

Paul Volcker, the former US Federal Reserve Board chairman who is now a member of President Barack Obama's advisory team on the economy, spoke in Toronto recently as part of the Grano Speakers series.

His topic, of course, was the extent of the crisis facing the US, and particularly what brought it about. (Solving it is another issue). He is the latest to suggest Canada is in far better shape, and has been far better served by the structure of its banking system, than the US, Europe and other regions.

"It’s interesting that what I’m arguing for looks more like the Canadian system than the American system," Volker said, pointing to strong banks focused on traditional commercial banking practices -- taking in money and providing credit -- that operate separately from the high-risk financial highwire acts that brought down Wall Street, and for which Volker has little respect.

Here is the speech in full:

I really feel a sense of profound disappointment coming up here. We are having a great financial problem around the world. And finance doesn’t work without some sense of trust and confidence and people meaning what they say. You take their oral word and their written word as a sign that their intentions will be carried out..

[Dr. Sivana]

Canada has a tiny fraction of the selection of banks here, and 30 year mortgages, a staple here, are almost unheard of. You typically have to finance in small chunks.

[americanophile]

"Volker said, pointing to strong banks focused on traditional commercial banking practices"

Not community reinvestment?

[Darkwolf377]

I really feel a sense of profound disappointment

Welcome to the club.

I've never seen an administration so bent on telling Americans how much they suck.

I seem to recall Reagan being a cheerleader for the US.

[Army Air Corps]

Ping.

[jessduntno]

“...Grano Speakers series”

As in, take it with a Gano salt???

[what's up]

30 year mortgages, a staple here, are almost unheard of

What's the typical term there?

[jessduntno]

“...Grano Speakers series”

As in, take it with a GRANO salt???

[Venturer]

Canada probably doesnt have the amount of deadbeats buying McMansions they cant pay for, and they didnt have Jimmy Carter and Bill Clinon encouraging these dead beats.

Thier biggest asset is that they dont have Barney Frank eother.

[fanfan]

Thanks for the ping, Army Air Corps.

[fanfan]

5 years is typical.

7 and 10 year are available at a higher rate.

[Freedom4US]

Is there somewhere on the web that breaks down how mortgage instruments operate in different countries? 30 year fixed is a recent (WWII) phenomenon, I’m sure of that, and rare outside America? Even here it used to be say, 50 percent down prior to the depression era, and renewed every 6 months, callable at any time. I remember reading that Mexico has maybe 30 or 40 thousand mortgages (not a typo) in the entire country!

[fanfan]

Thanks for the post, Publius.

[Army Air Corps]

Odumbo is the anti-Reagan. All he can do is talk about how much everything sucks. Reagan recognised that the US faced challenges, but that the American people could meet any challenge with resolve and can-do spirit.

[fanfan]

I seem to recall Reagan being a cheerleader for the US.

Compared to Zero, Clinton was a cheerleader for the US.

[what's up]

The majority pay off their mortage in 5 years?

[what's up]

I mean “mortgage”.

[Praxeologue]

25 or 30 year amortization, 5-year term is typical

[Dr. Sivana]

What's the typical term there?

I seem to remember something along the lines of five years. Of course, people re-mortgage each time. WHen I visited my future wife's family I was flabbergasted when I found out. I just had visions of an old silent movie with the girl tied to the railroad track and the farm being seized by some guy with a big mustache.

[what's up]

I see.