Bailing out ‘banks’

It figures that Al Hogan would take a belligerent posture towards the so-called bailout of the Caisse in Shippigan. He has a commentary in today called “Why must citizens bail out ‘banks’?”.

It’s funny why he never has a commentary about why should citizens bail out Irving (the LNG project, the $250 million forestry subsidy, etc.), but bailing out the poor citizens of Northern NB that had their savings with the Caisse, those demons should be hammered – so Al infers.

But I digress.

Because I don’t know the specifics of the Caisse situation, I won’t comment directly on it. I will comment on Al’s snide remarks about bailing out banks, however and with his little “what we could have done with that $60 million musing”.

First, residents have to have confidence that their savings are protected. That is why there is deposit insurance in every developed country in the world. To let the Caisse ‘fail’ and have a run on the bank by its customers and not enough money to meet the run, would be disasterous and should never be allowed by government. Now, of course the Tory government (or any government) should have had processes and oversight in place to ensure that it never came to this. These oversight mechanisms are in place for most of the traditional banking sector in Canada. But regardless of why this happened, I will never be convinced that letting the Caisse fall was an option because it would hurt most the poorest members of that institution.

Second, Al’s commentary (or whoever wrote it) rambles on about what we could have done with that $60 million. True enough. And I suspect that everyone around that Cabinet table agonized about this. But it’s disingenuous for Al Hogan to talk like this. He who fought rabidly to get the toll taken off the Moncton-Freddy highway (why he did is quite clear) – I still remember 11 straight editions of the T&T with this story as front page news. 11. This toll highway deal which was ultimately criticized by everyone -even Volpe had regrets about it – cost the citizens of New Brunswick at least $300 million and residually millions more every year in lost toll revenues from non New Brunswickers. And Al Hogan along with the Toll Busters – were the two major influencers of this infamous Bernie Lord decision.

What could have New Brunswick done with that $300 million, Al? How about the $250 million forestry subsidy mostly to bail out your owner? What could we have done with that? How about the $50 million LNG subsidy? What could we have done with that? I suspect we could rhyme off dozens if not hundreds of examples of government spending that was capricious if not downright offensive.

But protecting New Brunswicker deposits they made in good faith -without knowing about any bad management or illegal practices – is one of the smarter things that governments can do.

This entry was posted in Uncategorized. Bookmark the permalink.

0 Responses to Bailing out ‘banks’

  1. Anonymous says:

    “But protecting New Brunswicker deposits they made in good faith -without knowing about any bad management or illegal practices – is one of the smarter things that governments can do.”

    Perhaps, but making it a grant not a loan and asking for the police to investigate AFTER the public cried foul were some of the dumbest.

  2. Anonymous says:

    I agree with Anon above. First, it should have never gotten to the point it did. Think about it. $60M for bad debts is a lot of money;serious money for NB. Bad debts indicates to me there are no assets (like a house) to secure the loans against so what did we pay for (snowmobiles,4 wheelers?).

    Assuming this was done in good faith to protect deposits, providing the bailout with no apparent strings attached is approaching insanity.

    A criminal investigation, a management cleanout, modified legislation, interium reporting requirements and a repayment schedule (albeit lengthy) should have been all required before taxpayer’s money was promised.

    Will we be in the same situation in another year or with another Caisse? Who knows, but throwing money at the situation is simply rewarding bad management. The government may have done ‘the right thing ‘but they did not ‘do the thing right’.

  3. David Campbell says:

    Yeah, don’t misunderstand me on this. A small Caisse needing a $60m bailout seems nuts. Either really bad management or a bad regulatory situation or both. But it should have been addressed long ago it would seem. I am glad there is an investigation by the RCMP. Let’s hope that the Caisses populaire acadienne does a better job.

  4. Anonymous says:

    The problem is that a Caisse, unlike a bank, needs special considerations from the provincial government. Nobody has said anything, but the idea thrown around that the PC legislation to guarantee people’s deposits was a bad one and ‘should be corrected’ is pretty scary and will have bad ramifications for the credit union industry, which, as we know from this blog, is far more convenient to industry than the national banks.

    That the tories would pass that legislation makes a little more sense now that this has occurred. And we’ve already heard that it seems that there was political interference. It’s interesting that all over the blogs people are saying ‘this has been knows for years’, and yet there is no mention of it in any media.

    But back to the point, once again I don’t think I need to do any ‘incessant drumming’, the Irvings do that themselves. If a book were ever to be written, the ‘bailout’ section is definitely one for a chapter. Anybody have a copy of a good editorial back when they were preaching the gospel of forestry bailouts?

  5. Anonymous says:

    Why must citizens bail out Corporations?
    Published Saturday April 14th, 2007
    Appeared on page D8

    If New Brunswick taxpayers are troubled and confused about the Conservative government’s bailout of Irving pulp and paper and the forestry industry – to the tune of $500 million of taxpayers’ money – they may be forgiven. The situation is murky and unclear and the political accusations and posturing surrounding it are making it worse.

    That leaves New Brunswickers with little more than a lot of probing, and disquieting, questions.

    What happened during the past ten years as New Brunswick benefitted from the softwood lumber deal that imposed huge duties on Quebec, Ontario, Alberta and British Columbia that prompted this bailout? Why were the signals, which didn’t occur overnight, not nipped in the bud by the province’s department of Environment?

    It is too bad that no RCMP investigation has been asked to do a forensic audit to determine whether there was any illegal things happening, there remain serious questions about how this could happen. Yet unfortunately, all the industry players have closed books and simply claim ‘we need more’.

    And what is the situation in the rest of our forests? With no more than 5 large scale licensees, each of which has almost as many assets as the entire province, New Brunswick’s forests are being sold off for cheaper and even meagre funds for the province. We are told there is nothing to worry about. Having more than 90 per cent of the crown land in the hands of just five companies should be worrisome. Just how sloppily run are these giant multinational corporations that follow the greed is good model? It is difficult to understand how a well-run, properly managed corporation, especially a large one, can lose the kind of money lost in the New Brunswick forest industry.

    It is also difficult to understand why the province would bail them out. They are businesses, they have investors and owners, they have responsible boards who make decisions, and there is risk, the same as with any business. Taxpayers don’t normally bailout businesses, nor should they.

    How much could Bernard Lord and his government have done with the $500 million the bailout package cost? What health care or education services won’t be provided as a result? Will the Petitcodiac River restoration be ignored as a result? If it costs $1 million a kilometre to build a modern highway, an estimate often cited, the entire length of the badly rutted Highway 15 between Moncton and Shediac could be rebuilt with that amount, leaving lots left over.

    The bailout is hard to justify in light of the budget and what we’ve been told about provincial finances. The treasury was supposed to be facing crippling deficits, not wallowing in cash to give corporate bailouts. The only thing that is truly clear is this: the public is owed a lot of answers and explanations, free of political argument and spin.

    The present government’s duty is to handle it, explain it, ensure it doesn’t happen again, and to protect taxpayers’ funds.

  6. David Campbell says:

    Touche, but that appeared in an Irving paper?

  7. Anonymous says:

    I guess you didn’t catch the satire. That’s Al Hogans article, I just replaced the word ‘credit union’ with ‘corporation’ and ‘irving’. And ‘banking’ with ‘ forestry’. And a few other little changes in there too, but actually not many:)