Did Canadian banks receive a secret bailout?

The Canadian Centre for Policy Alternatives is accusing the government of giving this country’s banks a multibillion-dollar secret bailout in 2008

Canadians were never told the true cost of a $114-billion “secret bailout” for the country’s biggest banks during the financial crisis, says a report from the Canadian Centre for Policy Alternatives.

“We’ve had a false sense of security,” said study author and CCPA economist David MacDonald.

“Ever since the global financial crisis struck in 2008, Canadians have been subjected to a constant refrain: Canada has the ‘most sound banking system in the world,’” MacDonald writes in the report. “During the worst of the crisis — 2008 to 2010 — the official line was that Canada’s banks did not require the extraordinary bailout measures that were being offered in other countries, particularly in the U.S.

“At its peak in March 2009, support for Canadian banks reached $114-billion. To put that into perspective, that would have made up seven per cent of the Canadian economy in 2009 and was worth $3,400 for every man, woman and child in Canada.”

A spokesman for Finance Minster Jim Flaherty said MacDonald got it wrong.

“Despite conspiracy theories to the contrary, there was no ‘secret bailout,’” said Flaherty spokesperson Chisholm Pothier. “Even a cursory look at the facts, readily available and published many times, indicates this report is completely baseless.”

To some extent, the report and the rebuttal to it are a matter of how the facts are interpreted.

Where MacDonald says “bailout,” a finance ministry official says “liquidity support.” While MacDonald said the government tried to hide the numbers even from Access to Information requests, the official said the bank funding was “clearly, publicly laid out — repeatedly.”

MacDonald used public filings by banks, government agencies, and financial regulators to provide what he called a composite picture of the flow of money between financial institutions and the individual Canadian banks struggling in the midst of a global recession.