February 27, 1978


AFTER RECESS The House resumed at 8 p.m.


GOVERNMENT ORDERS

BANK ACT


The House resumed consideration of the motion of Mr. MacEachen (for the Minister of Finance) that Bill C-16, to amend the Bank Act and the Quebec Savings Banks Act, be read the third time and do pass.


PC

A. Daniel McKenzie

Progressive Conservative

Mr. McKenzie:

Mr. Speaker, I should like to continue with my remarks in regard to how credit unions offer many additional services free of charge compared to banks. Turning to the article which I was referring to earlier, it reads as follows:

Banks certainly offer many of the same services, and quite a few others as well-although there's usually a charge.

But the credit unions offer many of the everyday services free, and the rates they pay for savings are often slightly higher than those paid by the banks.

To obtain the revenue for this, the credit unions sometimes charge slightly higher loan and mortgage rates-but then they often allow you to make extra payments ahead of time without penalty, which can be worth quite a bit.

The article went on to quote the comments of one member of a credit union who indicated the following:

We own a 12-site apartment and our cash flow is about $30,000 a year. Our account's monthly balance ranges from $1,200 to $2,000. Our bank didn't pay interest on the daily balance, so we switched to a credit union which does. And our credit union cheques work out to a cost of ten cents each versus the bank's 21.7 cents.

These are things we can question the bank representatives abcut when they come to committee in order to find out why the same services cannot be offered.

Earlier in my remarks I referred to the government's white paper on revisions to the Bank Act. It pointed out that some type of legislation would be brought in to deal with venture capital. Just last month I spoke on that subject in another debate. I indicated how important it was for our secondary industries to obtain venture capital. Venture capital cannot be obtained because of conditions in the country today. Apparently the government has some kind of program in regard to venture capital which will be presented.

Last week the Minister of Finance (Mr. Chretien) stated that the opposition was making him look good. When we experience delays like this and the stalling tactics which have occurred, neither the minister nor the government looks good. With the economic conditions in the country today, the government looks terrible when it delays something as important as the Bank Act. Also it is a disgrace that the minister is delaying the development of the new Bank Act. Independent businessmen of Canada have pointed out the kind of changes required in the legislation in order for small business and secondary industry to obtain venture capital. This is important today with our record high unemployment, which is costing $8 billion a year. It is time for something to be done to expand our secondary industry and to assist our small businesses, instead of just bringing in ridiculous pieces of legislation calling for delays in bringing in the Bank Act.

Earlier this year I read from a document from a financial group in Winnipeg named Peter Henry Jerch and Associates. They are a firm specializing in corporate finance and acquisitions. They have a significant roster of clients needing capital and are aware of many of the situations where the injection of equity venture capital can produce very beneficial results to them and to the economy at large. In fact, the need is so broad that nearly half of all companies that apply to banks for credit should have additional venture capital to make them more successful and more viable.

Instead of allowing this tremendous outflow of capital to the United States and large numbers of businesses to move to the United States because of the political climate here and the uncertainty caused by delays in producing the Bank Act, which should have been tabled here at least a year ago, the government points out the need for all these things in the white paper but is doing nothing. It is just bringing in ridiculous pieces of legislation asking for more delays.

February 27, 1978

This investment counselling firm also pointed out:

... if such venture capital investments could be offset in full against other income, and besides the tremendous impact on the short and long term economy, there would be no negative effect on government tax revenues. To test this assertion, Peter Henry Jerch and Associates conducted a detailed survey of 40 smaller Canadian owned companies located in Ontario, Manitoba, Alberta and B.C. The survey delved into nearly every aspect of a company and included a review of financial statements and books, a review of management ability to carry out a proposed strategy, and a study of product viability and historical projected market acceptance. Detailed summary tables were drawn up based on the results of this in depth review.

They go on to give statistical information on how they could expand and the number of jobs they would create if they could receive additional venture capital which they cannot obtain in this country and which, as the minister pointed out in his white paper, is one of the top requirements in this country. But apparently we will have to wait until unemployment goes up, more businesses leave and more investment capital leaves the country. Then the government might get around to bringing in revisions of the Bank Act. This is a ridiculous situation although, as I said at the beginning of my remarks, we could go along with a further extension of the Bank Act if the legislation is tabled now and businesses, credit unions and banks across Canada have this document to study so they can prepare themselves.

Therefore, Mr. Speaker, I cannot support the delay for which the minister asks. I hope he will read the remarks that were made today by the hon. member for Edmonton West (Mr. Lambert), by myself and by others who will speak later. I hope they will be forceful also in demanding that this irresponsible minister table the Bank Act immediately, instead of making ridiculous statements in the House that he looks good.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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PC

William James Kempling

Progressive Conservative

Mr. Bill Kempling (Halton-Wentworth):

Mr. Speaker, I would like to say a few words about Bill C-16 which is before us, the purpose of which is to extend the Bank Act for another year. My colleague, the hon. member for Winnipeg South Centre (Mr. McKenzie) and the hon. member who spoke prior to him, the hon. member for Edmonton West (Mr. Lambert), both expressed my views clearly on why we are debating this bill when, as they have said, we should be debating the new Bank Act. I know that the minister, the people in his department and most of the people in the private sector to whom I spoke look upon the revised Bank Act as the basis for any economic recovery which will occur in Canada. We have all read the white paper on banking and the proposed changes to the Bank Act. We know that the legislation is ready and has been for some time.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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LIB

Joseph Jacques Jean Chrétien (Minister of Finance)

Liberal

Mr. Chretien:

This is not true, it is not ready.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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PC

William James Kempling

Progressive Conservative

Mr. Kempling:

Perhaps we have been misinformed, but we were informed in January that the Bank Act is ready and that we might possibly be debating it-

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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LIB

Joseph Jacques Jean Chrétien (Minister of Finance)

Liberal

Mr. Chretien:

With the permission of the hon. member I would like to tell him that if the bill were ready, 1 would be tabling it. The bill is being drafted at this time by the Department of Justice. I am as frustrated as the hon. member

Bank Act

that the bill is not ready. We had a long debate after the white paper was brought forward, we had more representations and some changes had to be made. Since the bill is not ready, I am not tabling it. It has not come back to me in its draft form.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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PC

Dean Waldon Whiteway

Progressive Conservative

Mr. Whiteway:

That is the problem. The bill is not ready.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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LIB

Joseph Jacques Jean Chrétien (Minister of Finance)

Liberal

Mr. Chretien:

I said that in the committee about two weeks ago. I know that when the hon. member said the bill was ready, he was probably using information he had, and I wanted to correct his wrong impression.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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LIB

Denis Éthier (Assistant Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Ethier):

I am sure the minister wanted to rise on a point of clarification, but this does not justify a point of order.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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PC

Dean Waldon Whiteway

Progressive Conservative

Mr. Whiteway:

That is the problem, it is not ready.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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PC

Steve Eugene Paproski

Progressive Conservative

Mr. Paproski:

Nothing is ready over there.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
Permalink
PC

William James Kempling

Progressive Conservative

Mr. Kempling:

I thank the minister and I accept his explanation that the bill is not yet ready. What I was referring to was information that we had in January to the effect that the bill was ready, had been drafted and approved; and, I might go on to say, we were even told that it followed the white paper very closely with few changes. I am referring to the white paper which was presented in August of 1976. We were told that that is the sort of bill we would be seeing. So I was not just spreading an idle rumour; I was speaking on the basis of pretty good information.

However, now that we are talking about the bill not being here, let me point out that the bill was being considered in 1973, 1974 and 1975. Here we are in 1978, five years after the bill was first considered, being asked to extend the existing legislation for another year to give the government a chance to bring in revised legislation. It is particularly important because people in the private sector are being pressured by the government to stimulate employment, to expand their plant facilities, to help pick up the slack in unemployment, to help export more products, and to offset our balance of payments deficit. The reason for not doing this, aside from the general economic condition, is the severe difficulties they have in obtaining adequate financing through our banking system.

In the last ten years, the ability to accumulate wealth has dried up. Normally, one could go into the stock and raise capital in order to spawn a new industry or enlarge an existing one, but that facility is not available today. The result is that we have to rely on what was traditionally a short-term money market for long-term investments. When we have difficulty getting those commitments out of some of our banks because of restrictions in the existing Bank Act, that is one of the major reasons for the absence of an upsurge in economic activity in Canada.

We need a variety of financial institutions in Canada. After reading the white paper on proposed changes to the Bank Act and on proposals regarding the credit union movement I was concerned. I suggest to the minister that possibly we need two levels of financing. Perhaps we need the level of our ten

February 27, 1978

Bank Act

chartered banks and another piece of legislation to deal with credit unions, merchant banks, discount houses and those kinds of financial institutions. I am not convinced that we should bring credit unions totally under the control of the Bank Act.

If we look into the matter carefully, I think we will find that the bulk of assistance being given to small business today in Canada is given by credit unions. A tremendous amount of assistance is being given to small business by credit unions, I believe more than by chartered banks. I would be upset if we tried to cast a net and draw credit unions totally into the same orbit in which we find chartered banks.

One of the things we need most is confidence in the dollar. We also need confidence that Canada will continue on some rational footing for the next period of time. We need confidence in the integrity of Canadian enterprise. I do not think that confidence will come through programs and incentives from the Department of Industry, Trade and Commerce, where there is much bureaucracy but as a result of a realistic revision of the Bank Act, a close look at the functions being performed by trust companies and credit unions and an examination of the merchant banking system which we find to be very successful in Europe.

In my own career in business I had an opportunity to use merchant banks. Many years ago we had a tight money policy. At least that is what bankers in Canada told us. I had some difficulty acquiring some funds, so I got in touch with a merchant banking firm in London, England. After telex messages passed back and forth between London and my office, in a matter of 24 hours a line of credit was arranged which could not be arranged with one of our chartered Canadian banks. Merchant banks have a place in our banking system.

One gentleman in the business community whose opinion I particularly respect told me at the weekend that sooner or later Katz' Law is going to come into effect in Ottawa. According to Katz' Law, when you have completely screwed up the economy sooner or later you are going to do the things you should have done in the first place. Had the government pursued a revision of the Bank Act in 1974 and 1975, we would have been better served than we were by the imposition of controls. As I have said, the cornerstone of the economic recovery program is a revived and revised Bank Act.

One of the difficulties which was experienced by many businesses in 1975 and 1976 when our interest rates were running high was that they had to make arrangements principally in the United States and Europe to finance inventories. They entered into arrangements with European and American suppliers to finance inventories at rates of interest ranging from 5.5 per cent to 7.5 per cent, which was considerably lower than rates in Canada. As a result of a slowdown of activity in 1977 many of those business firms are now carrying notes from European and American financial institutions on their books. With the present devalued dollar they are into a serious profit position.

The stabilization of the dollar, a reconstituting of the Bank Act and a revision of the Bank Act are vital to everything we

do in business, and I am amazed that when we came back here in the fall the government did not announce that it would proceed full speed ahead with a new Bank Act and endeavour to have it in place by the spring of 1978. I want to stress the need to revise the present act. Businesses face tremendous difficulties with various sections of the existing act. I have raised the matter of section 88 before. That is the section of the act which deals with collateral. Under section 88, if you are in a manufacturing operation, banks will accept as collateral raw material and work in progress. However, once that work in progress is completed and is part of inventory it no longer falls under section 88. Where material rolls off the line and is delivered, that is fine; section 88 works well in that situation. But where there is a slowdown and where there is an accumulation of inventory, the business involved rapidly runs out of money, especially if that inventory is stored for a long period of time.

I have heard various members of the New Democratic Party urge that certain industries should be stockpiling or building up inventories to keep employment going during the present economic slowdown. The very real difficulty is the financing of that inventory. Most trading companies and most manufacturing companies have a great deal of difficulty financing finished inventories. Consequently, they tend to keep a minimum of finished inventories on their shelves. We really need some new instruments and some changes in the act in order to accommodate this situation. Banks need a new instrument to deal with small and medium-sized businesses, and I hope the minister will consider what I have said about two levels of financial institutions.

Once again I say that credit unions, trust companies and merchant bank operations could be governed by another type of legislation. Perhaps there could be a financing instrument to deal with the requirements of small and medium sized businesses. Under the existing act the small businessman really has very little leverage through the medium of a debt instrument which he can use to finance his business.

We are concerned, of course, with the forecast in the white paper about the role of the chartered banks in the areas of leasing, computer services and the extension of consumer credit. If the banks enter these areas to any great extent it could be to the detriment of the small and medium sized business sector. I think that would be a tragedy, Mr. Speaker.

We face difficult times. Unemployment stands at 8.3 per cent, inflation at 9 per cent, the Canadian dollar is under 90 cents U.S. and is unstable, while private capital spending is below 3.5 per cent. Everyone is calling for increased activity in the private sector and it seems to me that introduction of the Bank Act would do more to stimulate this than any other action. Programs of the Department of Industry, Trade and Commerce, GATT incentive programs, controls or no controls, labour relations, competition legislation-none of these things will have as much effect on the private sector as a revised Bank Act.

February 27, 1978

The minister has said that the legislation is presently being drafted by the Department of Justice and that he has not seen the draft. Of course, I take his word for that. He has also said that he wants to bring the bill to the House as soon as possible. That is rather strange when you consider how long it has been around. The Bank Act is due for revision every ten years and we know work was being done on it in 1973, yet after five years we are being asked to extend the present act.

I would urge the minister to bring the bill to the House as soon as possible. We did not have an opportunity to debate the white paper and it was never referred to the Standing Committee on Finance, Trade and Economic Affairs. It is true that the Senate studied it and the chartered banks and some other institutions had an opportunity to consider it, but the House did not. When the revised Bank Act is ready we are anxious that the House have an opportunity to debate it, to hear witnesses and, if necessary, to offer amendments to make it legislation the business community can work with for the next ten years.

That is about all I have to say on Bill C-16 at this time. Some of my colleagues will be speaking and I presume we will proceed with the bill when the other speakers have completed their remarks.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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PC

William Hillary (Bill) Clarke

Progressive Conservative

Mr. Bill Clarke (Vancouver Quadra):

Mr. Speaker, there are three main points that should be made when considering Bill C-16 and I do not think they can be made too often. First is the irresponsibility of the government; second is the uncertainty in the business community; and third is the uncertainty of future activities of the banks themselves.

Some of my colleagues have spoken of the performance of the government leading up to this bill and some of the things they have said are worth repeating briefly. The Bank Act expired on June 30, 1977. It is not as if the government did not know this was going to happen; one might say the government had ten years' notice that the act would expire. This act is not like any other; it does not just expire and become part of history. If it is allowed to wind down and expire, the banks are forced to wind down all operations on the day of expiration and then have no authority by which to operate.

If the ten years' notice were not enough for the government, they were reminded of their responsibility to introduce new legislation in 1977 when the first extension bill which extended the Bank Act until March 31, 1978 was introduced. After that came the white paper. The government might say it has so many things to do it could not possibly get the legislation passed by March 31, so now we are asked to extend the act until March 31, 1979.

There is a catch in this bill, Mr. Speaker. It is not only a bill to extend the operation of the Bank Act until April 1, 1979; in fact, it could go on for quite a few months more. That is not evident from the bill. The extension could be for several months or ten months. What the bill says is that it will extend the act beyond the end of March, 1979 until the sixtieth sitting day of parliament next thereafter. Parliament rarely sits more than 20 days in any month so that would give three months if

Bank Act

parliament were in proper session. But let us suppose the government called an election next March, although, heaven forbid, there need not be an election until the fall of 1979. If an election were called in March, 1979 there would be a two-month election campaign during April and May. The House traditionally does not sit until a couple of months after an election so that would take us through June and July, nor does it usually sit in August, September or October. This would mean a possible extension not to March 31, 1979, but for seven or more months after that.

With that background I think we must ask why there has been a delay and why the government did not have the legislation ready. It has known for ten or eleven years when the review was due. If we look at the remarks of the Parliamentary Secretary to the Minister of Finance (Mr. Lumley) at the time the bill was introduced in the House in January of this year, it might be interesting to note that the Minister did not see fit to present the bill. It was presented by his colleague the Minister of Transport (Mr. Lang) and was introduced by way of opening remarks by the parliamentary secretary. One would have thought that the minister would find it important enough to be here since it was the first day of the resumption of parliament after the Christmas recess. In any event, at page 2118 of Hansard the parliamentary secretary said:

First, the extent of consultations encouraged by the white paper. Second, the extent and complexity of the task of converting the principles of white paper into legislation and particularly, where appropriate, making the Bank Act consistent with the principles and provisions of the Canada Business Corporations Act and, third, the extent of the pressure of other priorities on the small group of legislative drafters in the Department of Justice.

If I could comment for a moment on the last reason. We had an example where a mysterious bill materialized from the offices of the legislative drafters in the Department of Justice, which bore the name of the Minister of Finance (Mr. Chretien). It was strange that the Minister of Finance denied any connection with this particular bill. When I asked the Minister of Justice (Mr. Basford) last week what minion in his department had authorized the drafting of this bill, he was unable to recall the name of the author, what authority had been given for its drafting or for its release across this country.

What about these first and second reasons, which may be more important? The first was the extent of consultations encouraged by the white paper. The government called for submissions in response to the white paper from the business community. They received them and they were considered. They were distributed to all of the members of the finance committee. I have stacks of them in my office. But did the government ever call that committee to consider them in detail? No, Mr. Speaker, there have been no meetings by the standing committee to consider those submissions. The government itself undoubtedly had lots of time to examine those submissions. Goodness knows why they did not pay any attention to them. Maybe they did. Maybe that is why they withdrew the legislation.

3270

February 27, 1978

Bank Act

The second reason given by the parliamentary secretary is the extent and complexity of the task of converting the principles of the white paper into legislation. I am sure the banking community would like to know where they stand regarding the submissions which they made at the request of the government. The request was made for some input respecting the new rules that will be affecting banks in the near future. The legislation is nearing completion and the bill will soon be ready for introduction. At least, that is what we were told today when the hon. member for Edmonton West (Mr. Lambert) asked what was likely to be happening with the legislation. There have been ample opportunities for the government to have it ready. The words of the minister today merely repeated the statement which the parliamentary secretary made in his speech over a month ago. One would wonder if there is any faith in the system as exhibited by the government.

Again at page 2118 of Hansard, referring to the earlier amendment, the parliamentary secretary said:

That wording provides flexibility and acts as a safeguard in the event that parliament is not sitting at the end of March, 1979-

I believe I covered that when I said there was a possibility that this bill might not to passed until late in the fall of next year.

That is enough about the performance of the government. We should now turn to the performance of the banks to see what kind of consideration they deserve. The banks are often painted as ogres or worse by some members of this House. Management of Canadian banks is responsible in the performance of its duties. Everybody is not happy with the performance of the banks, just as everybody is not happy with the performance of politicians. There are split responsibilities. The management of Canada's banks has responsibility to its depositors. They must safeguard the millions of dollars belonging to Canadians on deposit in the banks. They are also responsible to the countless thousands of Canadians who own equity in the banks.

I do not have the number of shareholders at hand and I do not know whether that information has been given in this debate. However, I do remember when the International Nickel Company was the subject of debate in this House that the number of shareholders in Canada in that company was 55,000. If I had to guess, Mr. Speaker, I would say that there were several hundred thousand Canadians who had direct ownership of shares in Canadian banks. If we take the institutional investment in the banks and consider the beneficial ownership in the banks' equity stock by Canadians-and in this respect I am referring to pension funds, estates and trusts-I suggest there are probably millions of Canadians who have some direct or indirect interest in the operation of Canadian banks.

The executives themselves are not a particularly wealthy group. Some people are impressed by the high salaries of these professional managers in Canada. There was an example given just recently of an industrialist managing a large company earning something over $300,000. Salaries of $200,000 are not at all rare in Canada today. I do not know what salaries the

banks pay their top men, and this information may not be published. But that is not the point. These men are professional managers whose responsibility it is to serve their customers. At the same time they must protect their depositors and ensure that their shareholders, who are their ultimate bosses, receive a proper return on the capital which they have invested in those banks.

A lot is said about the banks and their huge profits. It is not necessary to go into the dollar figures here, but the percentage increases, which is the kind of information my friends to my left, and particularly the hon. member for Regina-Lake Centre (Mr. Benjamin), seem to indulge in, I have brought with me tonight. Profits of all Canadians banks, not counting the ones which lost money, in 1977 increased between 10 per cent and 13 per cent over 1976 profits.

Everything that is published in the financial world these days is published in numbers of actual dollars, not in so-called real dollars, which is the dollar discounted for inflation. If the government can allow the inflation rate to run at 9 or 10 per cent every year, an interest rate running between 10 and 13 per cent can hardly be said to be unreasonable. After all, the banks deal in dollar units; they do not get the kind of security against inflation which is held by people investing in real estate or in equities which increase in real value so as to offer protection against inflation. The banks have to reflect the result of inflation in the increase in their investments in terms of numbers of dollars. This is not to the discredit of the banks. If there is any blame to be apportioned for that kind of increase, it has to fall upon the government.

What kind of services are the banks performing and what kind of services do we want them to perform? It is true that the banks, because of the type of deposits they were in the habit of taking, were not for a long time involved in the mortgage market. Then, for a time, there was a non-legislative barrier against their being engaged in mortgage transactions- I refer to the interest ceiling placed on banks only. But since then we have seen an increasing involvement of banks in the mortgage field. Indeed, two years ago the banks were the holders of 21 per cent of all institutionally supplied mortgages. So more than one of every five dollars in the mortgage market had been put up by the banks, representing a sizeable proportion of mortgage funding in the housing field at any time. I suppose one might wonder whether this involvement by the banks increased the total amount of money available for mortgages or whether it merely allowed some of the other lenders to run off into other areas. I do not know.

Another important use of the funds of banks is in the small loans field. This is an area which is often overlooked. People sometimes think that the banks are being unfair in charging what they term a high interest rate on loans to individuals; rates of between 12 and 14 per cent are talked about and are realized by the banks. What is often ignored is the risk encountered by the banks and the rates charged by others in the field who are not in the same competitive position. I am

February 27, 1978

referring to some of those lenders who are subject to attack by supporters of the government when the borrowers and depositors legislation was introduced here and then allowed to die on the order paper.

It was interesting to note that when the legislation was introduced the then minister-I think he was the seventh in a row of nine or ten-spoke of an illegal rate of interest and stated that the highest rate of interest the government would consider would be something like six times the prime. In any event, it worked out to something like 50 per cent per annum before a rate would be illegal. And here we have the banks lending with a very small margin, because they pay interest, of course, on the amounts they lend out. They try to pay a rate of interest as high as possible to their depositors, and lend money to other Canadians who need it for individual purposes at 2 per cent or so over the rate. Indeed, sometimes the margin is no more than one and a half per cent. In any event, a real service to the community is being done in this field.

There is another and lesser known area, that of factoring. Many businessmen know how useful the banks are in factoring accounts receivable, say, in direct payments. What do we expect the banks to do in the future? Here is a real opportunity for the government and for the opposition to change the direction of banking in Canada. If the government would only come forward and let us know what plans it has, we could have something to say about the issue and so could the banking community.

With reference to other fields in which the banks might become involved I can only say I see certain dangers. For example, the banks want to become more involved in leasing. I see danger in this. I know there are many ordinary Canadian businesses which lease equipment and so on. If we consider the matter closely we see that leasing, after all, is only another way of borrowing money and that the one operation can be directly related to the other. If the banks were to step into the leasing field they would be competing with those who already lease equipment. When a lessor wanted to increase his line of credit with a bank the tendency, inescapably, would be for the bank to say: We are sorry, we have come to the end of the line of credit we are authorized to extend to you. The door would then be open for that bank, or any other bank, to jump in without restriction and offer to take the contract as a condition of providing the equipment. That is one possibility. There are undoubtedly others which would arise in connection with the expansion of banking activities. Thus it is important that the government get its legislation into the hands of the committee where it can be studied very carefully.

Finally, it is urgent that the bill before us be passed so that the banks will have this element of uncertainty removed from their operations and they will not be wondering whether they will still be in business after the end of next month. The best thing I can think of now as a member of the opposition is to urge the government to produce its revised act as they have promised to do very soon, but which we have not yet seen-

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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PC

Sinclair McKnight Stevens

Progressive Conservative

Mr. Stevens:

Shame!

Bank Act

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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PC

William Hillary (Bill) Clarke

Progressive Conservative

Mr. Clarke:

My hon. friend says "Shame" and that is a fitting note on which to end. Let the government cease to follow these shameful delaying tactics which are imposing such uncertainty upon the banking and business community.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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NDP

Leslie Gordon Benjamin

New Democratic Party

Mr. Les Benjamin (Regina-Lake Centre):

As a country boy from Saskatchewan, Mr. Speaker, I have been listening to hon. members from both sides speak on this measure. I want to take only a few minutes in which to remind the House that all this bill does is extend the provisions of the present Bank Act for another year while the government, like governments before it, agonizes about what should be done with our banking legislation.

In the history of this country, transportation and transcontinental railways were used as instruments of national policy. It seems to me this should be even more the case when it comes to banks and banking: they should be used as a tool of national policy. They should be used as a tool in terms of social policy, the direction of their investment, the kind of profits they make, how they treat their employees and their ethics or conscience in their dealings with Canadians, with their employees, and where they deal in other parts of the world. If anything has been lacking in financial institutions over many decades, it is some kind of conscience in terms of social policy, the ethics of who they deal with and how they deal with them.

One can go back 2,100 years. I do not want to infringe upon the territory of my colleague, the hon. member for Winnipeg North Centre (Mr. Knowles), but the parable of the money changers being driven from the temple is even more applicable today. It may have happened 2,100 years ago, but they have snuck in the back door and are here again!

The banks of our country whose depositors, borrowers and shareholders are Canadians are very large and efficient operators in the world banking industry. They are Canadian owned and operated for and by Canadians. When they deal outside of our boundaries, similar to the way investors did with the Hitlers, Mussolinis and Stalins of this world, one has to ask whether that is the kind of conscionable financial institutions we want in this country.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
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PC

William Hillary (Bill) Clarke

Progressive Conservative

Mr. Clarke:

Yes.

Topic:   GOVERNMENT ORDERS
Subtopic:   BANK ACT
Sub-subtopic:   AMENDMENT TO EXTEND OPERATION TO APRIL 1, 1979
Permalink

February 27, 1978