Fascinating story in USA Today on the banking system our neighbors to the North enjoy:
Our northern neighbor sometimes seems so similar to the United States that it’s hard to tell where the USA ends and Canada begins. Here’s one way: Canada is the place with healthy banks, taxpayers unscathed by megabillion-dollar bailouts and no need to overhaul financial regulation because it was done right the first time.
As U.S. officials scramble to prevent a crisis sequel, the ability of Canadian banks to navigate the current financial storm is earning global plaudits. The World Economic Forum in October ranked the country’s financial institutions No. 1 in the world for solvency. U.S. banks came in 40th, two rungs behind Botswana.
A few noteworthy differences:
• Superintendent of Financial Institutions: A single, powerful regulator;
• Industry Concentration: 5 banks have 85% of assets in Canada;
• More conservative executive-suite culture: Bankers are more like Accountants than Wall Streeters;
• Canada’s version of Glass Steagall repealed in the 19080s.
It is more than regulation alone: Canada has a very different corporate culture; is less driven by pursuit of option riches, and seems to be more concerned with sustainable, rather than short term, corporate profitability. Bullet points 2 and 4 would likely be abused in the US.
The entire piece is well worth reading . . .
U.S. regulators could learn from Canada’s banks (USA Today)
David J. Lynch
USA TODAY, July 2, 2009