Harper Bails Out Banks

Economy

I don’t get it, maybe I am thick, but when you buy bad mortgages from someone, to give them liquid capital, and you are the Government, how is that NOT A BAILOUT?

And yet according to Stephen Harper that is what he is saying. Course he also said we didn’t need to worry about our Banking System, as it wasn’t in trouble, like the American Sector was and is. He also said our Economy was stronger, that if we STAYED THE COURSE, things would be just fine.

Now he gives the Banks TWENTY FIVE BILLION DOLLARS FOR MORTGAGES.

While I agree that the situation isn’t as it is in the states, the problem is, can Harper be trusted to tell us the truth for this? He says they aren’t in default, that it is about giving added cash to the banks, that are strapped for it, due to the world situation. Okay, perhaps, but then again, if these mortgages are sound, and will cost us nothing, and perhaps make us money, as Harper says, why is no one else willing to accept them as collateral?

“We are not going in and buying bad assets. What we’re doing is simply exchanging assets that we already hold the insurance on and the reason we’re doing this is to get out in front. The issue here is not protecting the banks.”

Earlier in the day, Finance Minister Jim Flaherty announced the government’s plan to buy the securities through the Canada Housing and Mortgage Corporation and provide much-needed cash to financial institutions that sell the so-called “National Housing Act mortgage-backed securities.” (source - CBC News)

High Finance is not my thing, but if these are good assets, why are other financial institutes not willing to give up some cash to hold them? I don’t understand the logic here, and frankly, let’s be honest, our banks DID TAKE A HIT on the US Sub Prime Mortgage problem, so I wonder, is this just a sneaky way to help them out?

When you have NO PLAN, then suddenly are throwing $25 Billion at it, one has to wonder.

Ian @ October 10, 2008