No thanks on plank to let banks tank

27Apr10

I don’t know what scares me more: the fact the Toronto Star agrees with Jim Flaherty on an issue, or the fact that I agree with the Star agreeing with Flaherty.

Confused? Me too.

In today’s editorial, the Star argues that Flaherty has some good reasons for refusing to get on board with the G20’s proposal to put a tax on banks and use the proceeds to set up a relief fund in the event of any future bank failures.

Flaherty has argued that Canada can regulate its banks however it chooses. And, as the Star notes, having emerged from the great financial crash of 2008 without a single bank failure, it can be argued that our banks are doing just fine on their own.

Further, the Star argues, it isn’t fair to ask healthy Canadian banks to help bail out financial institutions in the other G20 countries that aren’t as well-managed. Likewise, the Star says, there is a large “moral hazard” inherent in this tax proposal.

Who’s to say, the Star argues, that setting up an emergency cushion wouldn’t allow banks to spend recklessly in the knowledge they have a fall-back option?

These are all excellent points. It never ceases to amaze me how little the powers-that-be have learned from the financial meltdown of ’08. Of course, who can be bothered trying to change their ways when the hand of Big Brother is always there to help cover your mistakes?

For once, I agree with our federal finance minister. Our banks can operate of their own accord. I also like his suggestion that the G20 adopt tougher measures to regulate bank operations as a means of controlling their greedy ways.

A tax on banks only sets up a fund for them to suck dry the next time they run aground. And it isn’t right to set up a system that would punish the best-run banks in the G-20 – ours.

Good on ya, Jim. Hope you succeed in keeping the wolves at bay.

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