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Originally Posted by Baraka_Guru
As far as the banking industries, that's a fair comparison, but there are other factors the information above doesn't cover. For example, we didn't have a mortgage crisis like the U.S. did. Much of that has to do with regulations barring banks from taking on certain borrowing risks. More specifically, there is a minimum requirement for a down payment on a home, and below a certain threshold, the borrower must take on mortgage insurance.
And this ties into my original reaction to your comment about "government interference." I'm not currently sure if you were referring to the task-based measures taken in the U.S. banking industry or if you were referring to government measures in general. But, as I've pointed out, and regardless of the distribution of assets throughout the industry, reasonable regulatory practices ensure that banks aren't taking on foolish risks when doling out credit to borrowers. That's the deal with the Canadian system: reasonable regulation. The U.S. system seemed way too lax. You said the SEC had the authority to do something but didn't. Perhaps the problem is that they had options and not rules.
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There are two primary components to government interference regarding the financial crisis in the US. One the government actively participated in social engineering by adopting policy that subsidized home ownership and hiding the risks. Fannie Mae, FHA, CRA, mortgage interest rate tax deductions, etc., helped create the housing bubble and encouraged greater and greater risk.
Two, government responded to the "financial crisis" in a irresponsible manner that did more harm by causing panic and over-reaction than good.
Imagine - I am the government and I want to avert a financial crisis - so, I take a piece of paper and write "one trillion dollars" on the note, and put it in my left pocket. Then I move the note to my right pocket - and proudly announce I saved the world.
Understand, the US borrowed bailout money, money they did not have, and give it to some banks that did not need it, to protect a few that did - and called it something good. Not to mention that the bailout amount was but a trivial percentage of the financial sector - yet so many buy into the b.s.
