Why Canadian Banks want tougher regs.

Time to comment on interest rate hysteria from a profit making framework.

- On Monday February 8th 2010, the Globe reports that the big 6 banks met with Mark Carney in November to highlight their fear of easy access to credit will will lead "to a potential collapse in house prices."

The article further states: "The banks reportedly want Ottawa to mandate tighter rules on mortgages so that buyers will need a larger down payment - as much as 10 per cent. They also want Ottawa to reduce the maximum amortization period of a mortgage to 30 years from 35."


In a follow up article on Tuesday February 9th, The Globe reports Peter Aceto, CEO of ING, the 6th largest lender in Canada, advised that the Canadian government
should think twice about changing qqasx0the regulations.

Aceto comments: “The banks in this country don't have to lend to the limit of the law – they can make smart rules on their own and not have Minister Flaherty make the decision for them.”

Now, let's think bank...every decision they make is for profit. Why would the banks want more regulation from Mark Carney?

They can't afford to police themselves and what the government to do it for them because they want to aggressively build more relationships with you. Think NHL salary cap!

Why else would the banks want to have the government increase regulations?

Well according to a note I read in the blog Canadian mortgage Trends (via Georgia Straight Blog), the banks want to cut out competition from smaller credit unions. According the George Straight article, "tighter mortgage rules would make life harder for the banks’ competitors, like credit unions, which rely heavily on mortgages."

That's a look of what's going on behind the curtain.