–Credit to reddit u/JackTheTranscoder
BACKGROUND
The Canadian Deposit Insurance Corporation insures Canadian bank deposits just like the FDIC does in the US, to the tune of $100,000 per person per type of account.
The CDIC is empowered by the Canada Deposit Insurance Corporation Act, with Section 10 of the Act describing the Powers of the Corporation and the Powers of the Canadian Minister of Finance.
COLLAPSE OF SVB AND SPILLOVER TO CANADA
When Silicon Valley Bank went bust, the OSFI seized control of SVB’s Canadian Assets.
The CDIC received a flood of phone calls and emails inquiring about insurance on Canadian Deposits. The CDIC, being the proactive and not-at-all ridiculous Crown Corporate that it is, tried to calm Canadian nerves by “reaching out to “influencers” it has worked with in the past.”
The Bank of Canada, in their Annual Financial System Review, assured Canadians that the Canadian Banking System Remains Robust.
I wonder what it could be referring to?
BILL C-47
Bill C-47 - An Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023 is the legislative authority that implements the 2023 Federal Budget. There’s of course been lots of news coverage of the Bill, but very little about the amendments to the CDIC Act.
Lexology provides a nice little summary of the main legislative objectives and changes made by C-47, including changes to the CDIC Act.
The Minister of Finance will be temporarily empowered to “increase the amount of CDIC deposit insurance coverage from the current $100,000 to any greater amount, including full coverage. This amendment to the CDIC Act is structured such that the Minister’s discretionary power will operate only until April 30, 2024.”
What struck me was that the Minister of Finance (with the Federal Cabinet) will be able to adjust the CDIC Coverage of deposits on-the-fly - which would usually required a regulatory amendment - but only until April 30, 2024.
It seems like the Canadian Government knows something is coming that will fuck Canadian Banks within the next 10 months, and is preparing for it. Granting only temporary power to the Minister of Finance is unusual, as normally they would just enshrine the change into legislation.
For a bit of background of the Minister of Finance, let’s just say she is very much old-money establishment and is not on our side.
2008 REDUX
If this all seems like a weird and roundabout way of doing things, that’s because it is. Canadians are told to take pride in our world-class banking system, but the Canadian Government has used roundabout methods to secretly bailout Canadian Banks in 2008.
Without getting all political on you, I’ll just say that the political climate in Canada right now would not allow the Federal Government to openly bail out banks, so it seems like roundabout methods are again necessary. Routing “liquidity” through the CDIC to prop up banks rather than openly bailing them out is subtle enough that the average lumberjack in Canada will have no idea it’s happening.
TO BE CONTINUED
There is more to share on the proposed changes in C-47, but the next post in a day or 2 will be more speculative in nature.
Until then, let’s focus on the fact that the Canadian government is preparing for bank failures. Oh, and just FYI, Bill C-47 came into force on June 22…
What the fuck! Thanks for this spotlight, I always wear my tinfoil out in public(not literally). But I menationed to my partner that the amount of CDIC stickers in banks and for sure online ads had been increased in the last year and defiatly since the sneeze. Seems like they are looking to prepare for the inevitablilty of gamestop by attempting to have citizens fit the bill of the rich onces again.
