It’s been a long search but finally one has emerged: A top banker who’s not afraid to hold Finance Minister Jim Flaherty publicly accountable for his anti-competitive rate actions.
Scotiabank CEO Rick Waugh said the following about Flaherty’s persuasion of banks to raise their mortgage rates:
“As a minister of finance, he’s obviously concerned about the well-being of the country. However, to price products for businesses — whether it be banks or manufacturers — is not what I would have expected.”
“I understand why the finance minister is concerned about the Canadian economy, but I just philosophically don’t think government should be setting product pricing.”
“Despite the difficulties of central banks to use interest rates, the alternative of trying to manage specific products or prices, to me, is fraught with difficulty.”
“The government sets the framework, but you’ve got to let companies go out and use their business judgment rather than the government’s business judgment.”
Consumers will applaud Waugh for being one of the only banking executives to openly challenge Flaherty’s efforts to deprive Canadians of lower competition-driven mortgage rates
The government has every right to set the general level of mortgage rates (via the Bank of Canada and securitization policy), but harassing individual banks and coercing them to reverse 10-20 basis point rate discounts is beyond its mandate.
Siderbar: Speaking separately about mortgage volumes, Waugh said he expects a “soft landing” in the market:
“Volumes for mortgage brokers and banks will be affected, but I don’t see it as a credit event of any significance.”