Canadians who are patiently waiting for Ottawa to hand down its guidelines for bank mergers would be well advised to refer to Samuel Beckett’s thoughts on pointless time-killing in his play, Waiting for Godot.
The merger guidelines have been delayed again because the Opposition won’t roll over and play dead and give the government advance approval before the papers are released.
It is now most likely we won’t see the guidelines until after the next election, when the Liberals have either secured a majority or feel confident they have full control over a minority Parliament.
Ottawa is a place where people don’t do things without a compelling reason, so the financial community could be waiting for many months yet.
Of course, once the guidelines do materialize, there will be so many qualifiers and caveats that anyone trying to pull off a bank merger won’t notice much difference than in the old days when they went grovelling to the finance minister’s office.
This is because so many interests have to be appeased, ranging from the NDP to the government’s own caucus, before the government would ever feel comfortable allowing a merger.
In addition, there is another very compelling reason why the banks won’t have the latitude other sectors do to merge: the government wants to maintain firm control over who is a player in banking and who isn’t.
Banks have been seen as privately run public utilities since Confederation, and little has changed.
In return for playing along, Canadian banks have been granted favours by the government, such as keeping out foreign competition as long as possible, ignoring
CIBC’s dangerous exposure to Dome Petroleum Ltd. in the early 1980s or keeping quiet in this decade about involvement by several banks with Enron Corp.
The banks are instruments of policy and public reassurance to be manipulated at the will of the Crown.
This is why there was an unwritten rule at the Department of Finance for nearly four
decades of “big shall not acquire big” when it came to large financial institutions.
And that is why the government forbade bank mergers in 1998 and then, in almost the same breath, announced there would be guidelines for something it had just banned.
It is also why Ottawa would block CIBC from taking over Canada Trust in 1997, but then quietly work many months with TD Bank Financial Group about a year later to put together a merger involving the same trust company.
The size and scope of the Canadian banking oligopoly is and will continue to be manipulated by the federal government. This was a hard-won power at Confederation and will always be jealously guarded.
But there may be a compelling development looming on the horizon that will force Ottawa to come up with merger guidelines and then approve a takeover of a Canadian bank.
A year ago, CIBC may have been the Rodney Dangerfield among the Big Six banks, but no one is laughing now, following its settlements involving Enron. Instead, people are questioning CIBC’s corporate culture and its ability to compete in the future.
And CIBC is being publicly identified by commentators as the weak link among the Big Six and the leading candidate for a takeover, either by another big bank or possibly an insurance conglomerate.
The public disquiet over CIBC is not good cartel management, so a government that has been reluctant to allow bank mergers may suddenly be in a hurry to approve one.
Beckett would have appreciated the irony.
It has been quite a summer for Stephen Harper — one that was marred before it really started with a particularly awful photo in newspapers across the country.
There is no sense describing it. We have all seen it.
Laughter aside, the photo says something about the party Harper leads.
As anyone in politics knows, every political leader is capable of looking stupid in a photo. This is why a politician’s handlers at a public event have to be careful about visual backdrops, who will be in the photos and, of course, what the candidate is wearing.
What would have happened if someone had told Harper to lose the hat, unbutton the leather vest and relax a bit before any camera was in sight? Clearly, Harper’s entourage that day had no one with either the inclination, skill or cachet to tell the leader he would look ridiculous.
@page_break@As Harper is probably learning, it is dangerous to surround oneself with loyalists and fellow travellers exclusively. To survive, Harper is going to have to reach out to professionals to join his office, even if it means making peace with Preston Manning loyalists such as Rick Anderson.
Otherwise, Harper will soon be remembered as just one of a half-dozen Opposition leaders who have faced two Liberal prime ministers since 1993. IE
Bank mergers? Yes, when Ottawa is ready
The unwritten rule that “big shall not acquire big” may have to change with the realities of the day
- By: Gord McIntosh
- August 31, 2005 October 29, 2019
- 12:11
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