Just before parliament got back to work in September, a group of Conservative Party members of Parliament headed to Toronto to spend the day with the city’s bankers for get-to-know-you niceties and some full and frank discussions on policy.

By all accounts, things went well. The MPs who form the Tory financial services caucus went away feeling a little empathy for the banks. The banks, for their part, left finally feeling that Ottawa better understood their issues.

For the banks, a group used to dealing with the Department of Finance and the Bank of Canada and calling the minister directly, spending the day with a bunch of almost invisible backbenchers must have been quite a departure.

The MPs who made this unlikely trip have demonstrated something about the current government as well: it is remarkably innovative when it comes to the constituency-building process.

Since Prime Minister Stephen Harper’s Tories took power, they have been busy setting up unofficial caucuses of their backbenchers on a sector by sector basis to make Canadian business owners feel like they are in the loop, one handshake at a time. Indeed, it’s becoming apparent that this government may be lobbying off Parliament Hill almost as much as it is lobbied on Parliament Hill.

With an August ruling by the Office of the Superintendent of Financial Institutions that banks could sell insurance from their websites, universal praise for the banks’ stability and the visit by a delegation of Tory MPs led by James Rajotte, chairman of the Commons finance committee, Canada’s banks must have been feeling pretty good about their new friends in Ottawa.

Then things started to go into the dumpster. After the unofficial summit between the Conservative financial services caucus and the banks came the letter from Finance Minister Jim Flaherty. It will be remembered as “the 150-word letter heard around the financial world”: the minister asked the banks to cease selling insurance on their websites. No mention of OSFI. Instead, Flaherty simply said that as banks can’t sell retail insurance from their branches, they shouldn’t over the Internet.

But Flaherty was more forthright on the political motivation: “This is an issue of importance to insurance brokers and agents in Canada.’’

No further explanation seems to be required. There are 33,000 insurance brokers in Canada, and many of them frequently turn up on riding association executives and fundraising committees.

In contrast, banks have traditionally been shy about their employees participating in local politics.

Politics trumps policy. Now, the banks must feel like Rodney Dangerfield with money.

Imagine if Ottawa protected travel agents this way. Imagine if Ottawa kept banks out of consumer loans — as it once did — to save the finance companies. Or if the feds continued to keep banks away from mortgages to prop up the life insurance companies. Suppose investors were restricted to using full-service stock brokers exclusively.

Propping up a system of middlemen and resellers of insurance, while limiting consumer choice, doesn’t make much sense in a digital age.

In fairness, Liberal politician Paul Martin was almost as crass: as federal finance minister in 1996, he inserted in his budget speech at the very last minute the announcement that banks would be kept out of retail insurance to satisfy all the brokers who were pestering the Liberals for protection.

This time, the current government had a chance to give consumers a choice and promote competition, and deliver on some of the change the Conservatives had promised before they were elected to office. Instead, they rolled out the pork barrel.

Ottawa has always tolerated oligopolies, although some more than others. Perhaps this is because of the nature of the Canadian economy.

Some, like telecommunications, are simply fashionable with the regulators and policy-makers and, therefore, untouchable. Others, like the banks, lost their lustre with the Ottawa crowd a long time ago.

Maybe it is time for the big banks to lose their shyness, not to mention distaste, for public discourse and take their case to the public with a campaign on how they can make insurance rates cheaper — just as the television networks are pounding the cable companies in a high-priced advocacy advertising campaign.

There will be considerable skepticism, of course, because hatred of the banks is about as Canadian as Timbits and hockey pucks.

But, historically, the banks can make a strong case to show that expansion of their business powers has been good for the overall economy.

@page_break@While the public might at first be amused by the sight of duelling cartels, the question of why Canada should continue to support an outmoded sales network will have to be answered.

And this is a question that should be settled in the public eye, not in the backrooms of Ottawa. IE