DLC’s Gary Mauris Interviews the Prime Minister

Dominion Lending Centres President Gary Mauris got the chance of a lifetime a few weeks ago: the opportunity to question Prime Minister Justin Trudeau face to face. That interview, which taped in the prime minster’s office, aired tonight on CBC.

Mauris had two questions for the PM. He began by grilling Trudeau on Liberal tax increases for Canadians making over $200,000 a year.

Top income earners are largely small business owers who create jobs, Mauris said. Their incentive to do so has diminished with punishing marginal tax rates well in excess of 50%. Mauris said other jurisdictions, like the U.K., have rolled back tax hikes on higher-income earners because they actually resulted in less tax revenue overall.

You’re not Robin Hood and the country’s not Sherwood Forest.“—Gary Mauris to Justin Trudeau

Trudeau replied, “We’re actually lowering taxes for small business down to 9%.” But more importantly, he added, “…Median household incomes have “stalled” for a generation of middle-class Canadians. Trudeau said his plan to take from the wealthy to give to the middle class addressed this problem, to which Mauris retorted, “You’re not Robin Hood and the country’s not Sherwood Forest.”

Mauris’s second question centred on consumer debt. “There’s been a lot of tightening of the mortgage guidelines,” Mauris said, but mortgage debt “isn’t the problem.”

“People are paying their mortgage payments in Canada…We have the lowest default rates anywhere in the Western world.” The biggest challenge is lack of credit card regulation, he suggested.

“[Canadians] aren’t refinancing their mortgages to use it as an ATM and go on a spending spree. They’re using it to refinance high-interest unsecured credit card debt…at 16-20% interest. They’re getting buried by [that interest],” Mauris stressed.

Trudeau agreed, noting, “We need to create opportunity to grow the economy” and improve financial literacy. “We’re now carrying more debt than the United States…I’m really worried about household debt in this country.”

The prime minister said his administration was working with banks and policymakers on the issue.

Mauris, always the deal maker, closed the interview with a special offer for the prime minister: “When you get around to doing that reno on 24 Sussex, we’ll give you the lowest rate in the country, and save you lots of money.”

  1. Any time we can put a positive spotlight on our industry it’s a good thing. I felt this opportunity was not wasted and Gary did a good job getting some real valid points across and still managed to remind the government that mortgage debt isn’t the problem and our mortgage lending system is in good shape. Now hopefully Justin has Gary on his Rolodex and will be calling him whenever the government contemplates mortgage rule changes.

  2. Trudeau said what any good economist says. When the middle class (or Canadians in general) have disposable income to spend on goods and services, it is good for business owners big and small.

    “Hiring more employees is a capitalists last resort if, and only if, rising consumer demand requires it… Jobs are a consequence of an ecosystemic feedback loop between customers and businesses.” – Nick Hanauer

    This graph (http://i.imgur.com/SdbJ3dK.png) shows as the tax rate for the rich decreases, unemployment increases. That should be incentive enough for Gary and other employers.

    Nick Hanauer explains this phenomenon in a 5 minute TED Talk: https://www.youtube.com/watch?v=CKCvf8E7V1g

    The graph above is taken from the Nick Hanauer TED Talk.

    1. A chart that doesn’t cite its data sources is always suspect, which isn’t surprising in this case given it’s from Nick Hanauer. Forbes wrote this about Mr. Hanauer and his little TED talk:

      “Unfortunately, the economics of taxation seems to be a subject he is deeply ignorant of.”

      Link: http://www.forbes.com/sites/timworstall/2012/05/19/the-ignorance-of-nick-hanauers-ted-speech/#6f9f01733ab3

      Affluence is liquid and creative. It ultimately flows to lower tax jurisdictions or finds ways to avoid higher tax burdens. The more you tax, the more successful businesspeople will move offshore or rearrange their affairs to avoid it.

  3. On these unsecured high interest credit cards; what is the intent here? The balances cannot be refinanced at a lower rate. Basically a financial land mine, and when you step on it, there is a delayed reaction. I think there is a niche here for a B lender to recognize refinance and consolidate instead flat out rejection of an application.

  4. Great job from Gary with valid points, government regulates mortgages but not credit cards. With JT’s answers I can take that more changes are coming to mortgage lending…

    1. We have B lenders that will refinance the credit card debt. The issue is credit management, once you refinance your debt into your mortgage or a consolidation loan you simply go back out, apply for more credit and your buried again only with nowhere to go because you’ve maxed out your homes LTV and have an unmanageable debt service. No lender in their right mind would get on that hamster wheel with because its a spending issue, people think there is always a get out of jail free card and when the deck is empty then what.. who is left holding the bag of bad choices and bad spending. The whole point here about consumer debt is its easy to get with little to no qualifying and clients can continue to

  5. I understand that consumers have alot of additional household debt due to overuse of credit cards but that will probably never change and the money that is spent on credit cards is also stimulating the economy while it is hurting the borrowers…..and unfortunately as a Mortgage Agent I would probably be unemployed if people did not spend because there would be no clients to refinance which is a large portion of my business…..I have also recently seen less Banks offering credit cards with large limits to just about everyone….so I think there is already something in place to slow down the lenders offering too much credit…on the income tax side, if you are a business owner do you not have control of what money you want to pull out of the business for personal income….the money that is left in the business can be used to pay it forward and grow the business from that revenue…I do believe the Prime Minister indicated that he did lower the business tax which would therefore free up revenue in the business for this sole purpose…..while noone really wants to pay more income tax I guess it has to come from somewhere…..the money that is going to help a business grow and flourish generally does not come from the owners pocket forever it eventually should be coming from the business revenue generated…..just saying!!!! I would think that any business owner can control what they draw from the business for personal income……

  6. I think Gary has done a great job setting up a company that gives mortgage agents like myself a great platform to work from to grow our own business but I do not consider myself an employee as an independant contractor. I believe reference was made to having 4800 employess country wide. I have to generate my own revenue and clients on a day to day basis however Dominion Lending has created a great brand for consumers to trust.

  7. It was one of the worst I have ever seen. Mr. Trudeau gave Gary uninterrupted time to speak, and yet every time Trudeau opened his mouth Gary interrupted him. That is just poor form and looks incredibly unprofessional and very “un-leader” like.

    From the comments I have seen on social media and on CBC’s own site, the only thing that people seemed to take away from this section of the special was that Gary was a rich banker looking out for his other rich friends. Is that REALLY the image we want out there?

    Not discounting his points, they were good… but based on the comments from people other than industry folks… he did not come off well at all. At the end of the day, their opinion matters much more because they are the ones that use our services.

  8. “You’re not Robin Hood and the country’s not Sherwood Forest.” ??

    I really wish Mr. Mauris hadn’t made such a trite and borderline insulting remark to the Prime Minister of Canada.

  9. Couple of comments. #1 – I have to agree with Rob. I don’t think that Mr. Mauris did a good job representing us at all. I, after reading Rob’s comments, went onto CBC etc. and read a lot of the comments made. 99% of the comments about Mr. Mauris’ interview were negative. Too many people found that his stance of taxing the rich, etc. was highly self serving and was akin to whining. That sort of perception by average Canadians is not good for our industry at all.

    The second thing, is the whole unsecured debt issue. First of all, by posing this question Mr. Mauris comes across as highly uninformed about the industry. Interest rates are higher because the rate of delinquency is significant (30%). Anyone who has any knowledge of credit knows that rate is determined by risk. The government does not regulate unsecured debt because they do not insure it, unlike mortgages. Anyone who has even baseline knowledge of credit and financial services knows this.

    And what about personal accountability for the consumer? The bank does not force people to spend beyond their means. they make the choice to do it. Anyone with even one brain cell that fires knows this.

    He also made statements that are NOT backed up by any statistical evidence. Such as the reason why most people refinance. There is no evidence to support this statement and yet he made it sound as though that is the only reason why people refinance their homes, to pay off high interest credit cards. Simple not true. Yes some people do it for that reason, but it is not the biggest reason. Never has been.

    As for his comment about Robin Hood… this is coming from a man who only resonantly bragged that his company originates over 30 billion in mortgages, more than any bank in the country. He comes across as sounding exactly like some of the commentary on CBC and other social media say… an elitist, rich snob who is only looking out for his rich buddies.

    That is exactly NOT the image we should want for our industry. We should be here to help the average Canadian achieve their dreams of home ownership, and get out of debt faster.

    It is THOSE customer Mr. Mauris that deal with your brand, they are the driving force behind our industry because they are the majority. Everything you said feeds into everything that millennials fight against, namely… the 1%.

  10. I just watched it again, and after grinding my teeth at the sheer disrespect shown to our Prime Minister by interrupting him constantly, there was one comment that stood out for me.

    Gary said: “This is not about the fat cat sitting in the corner office” – Um, isn’t that him? A millionaire running a great big company? Pot… meet kettle.

    1. I love the hypocrisy of people who badmouth millionaires. We all love to hate the 1% but we all want to be IN the 1%.

      Emilie, can you explain how a millionaire running a leading company is a “fat cat” when he’s worked his ass off, made untold sacrifices to be successful and created countless jobs for Canadian families?

      I don’t know how do you earn your money Emilie but you’re no better than anyone else just because you make less. Holier than thou attitudes like yours make me sick and are destroying the economic competitiveness of this nation.

      I for one am glad Gary stood up to Trudeau. “Prime minister” is just a title. He’s a man like anyone else and he’s employed by we, the taxpayers. I wish more people held Trudeau’s feet to the fire for his short sighted tax policy. His politician-talk deserved to be interrupted because it’s all the same blah blah blah redistribute-income-to-people-who-don’t-work-half-as-hard BS.

    2. Dominion Lending funds Mortgages, they see first hand why consumers refinance their homes. There is more than statistics, there is first hand knowledge at play here. Lenders require a reason for refinancing and want to know why the debt was accrued, why it is unmanageable and what you are going to do with your funds once taken out of the equity of your home. Statistics would be necessary for someone who is doing research, not necessarily so for someone who actually sees first hand whats going on.

  11. I’d love to know how Gary snagged that gig. Kudos to him or his people for lining up that interview. Whether you are a fan or if you are with the haters give props where props are due. That was a tough show to get on but Gary was there. We can argue about content till the sun goes out but the bottom line is a mortgage brokerage owner was on the program.That in itself was a good thing.

    I have been at this for a long time and I have seen a lot in this industry. There are many super people in this business, great minds and hard workers but the fact is Gary will outwork 95% of everybody, he bets millions on the future of the channel and although everyone is entitled to their opinion some of the pure haters should look in the mirror and decide if they have the guts to bet as big and the chops to run as hard.

  12. Dear Evan, thank you for your comments. I tried looking you up on the internet and quickly through The Provincial registries but couldn’t locate you.

    Just a few clarifications- The credit card debt discussion was brought up after explaining (in the full version) that further tightening of the mortgage qualifications was not necessary, and that the Housing market has been the bright spot in our economy for 10 years. I then shared my perspective that mortgage debt wasn’t the problem, and that Canadians were very responsible and that we have the lowest default rates in the Western World. My suggestion was that regulatory framework around high interest unsecured debt (credit card and other) would have the greatest impact on the consumer debt that Canadians find most difficult.

    I don’t know how many mortgage applications you see per year but we see a lot. Canadians typically refinance for: University tuition, healthcare emergencies, helping a family member buy their first home and to retire high interest unsecured debt (credit card, auto loans, etc).

    I agree that interest rates have to be higher due to higher default rates, and also realize that any type of spending does contribute to our economy. My biggest concern is our young adults have unfettered access to vast amounts of high interest unsecured debt, (credit cards and other) at a very young age with no standard qualification metrics. (Card issuers/Financial Institutions recognize that early adoption often leads to lifelong customers.

    Second point-CBC warned us all in advance that they often shut down comment sections entirely because the vast majority of all comments will be negative regardless of the subject, but especially around anything political. I was selected to represent business owners, those who typically are the top earners, and those who the vast majority of the public sector are employed with. I am sorry if being successful is offensive to you. I have traveled 120 days a year for 10 years, have been away from my family, took enormous risks (with no guarantees), and sacrificed like so many other Canadian business owners. Hopefully we have built something our agents and owners can be proud of, and something that hopefully brings value to our incredible customers.

    Third-point-For those wondering about interrupting the PM. The producers suggested that the Prime Minister may use long winded answers in order to slow down the process (we each had 10 minutes) and avoid the tough questions.They asked us to be aware of this and suggested we jump in frequently to make certain our time was used wisely and most effectively.

    Fourth point-You call it bragging, I call it marketing! Yes, we originate more than 32 Billion a year. Yes, we are proud of it, and yes in business size does have its advantages. Are you suggesting that promoting your advantages in business is wrong? I don’t know how you run your business (or if you even have one) but I am sure you will find it very challenging with your perspective on things.

    Lastly, I don’t have too many rich buddies. I have the same friends that I have had since grade 5, and that will never change. Thanks for your articulate response and hopefully you can find mine helpful.

  13. He makes a point about people not going on a spending spree, and then immediately and directly contradicts himself.
    ““[Canadians] aren’t refinancing their mortgages to use it as an ATM and go on a spending spree. They’re using it to refinance high-interest unsecured credit card debt…at 16-20% interest”

    Guess how they got that credit card debt? By going on a spending spree. Don’t tell me they got that credit card debt by buying the bare minimum groceries and household supplies. That is a microscopic minority of homeowners.

  14. I had a chance to watch the interviews over the weekend and I commend Gary for advocating on behalf of business owners. In my view, and certainly looking at how the other interviews went, there is nothing confrontational about Gary’s approach. Some of the other people cut the Prime Minister off too, and that was to be expected. Those people have very real concerns and some of them have been affected on a personal level by government policies, and they feel disappointed with how the politicians sympathize and promise all that help but hardly ever deliver.

    Even Waters:

    “The government does not regulate unsecured debt because they do not insure it, unlike mortgages. Anyone who has even baseline knowledge of credit and financial services knows this.”

    The big banks in Canada have been designated by OSFI as too big to fail and enjoy an implicit bailout guarantee should any of them run into financial challenges. So I agree with Gary’s assessment that credit card rates and fees should be regulated more closely because the banks earn billions of dollars in profit every year from these products and the government earns nothing ultimately backing the risk. With insured mortgages at least the government is getting paid to cover the risk and in many areas the collateral is an appreciating asset. When people run into financial challenges the first thing they cut payments on are the credit cards, and then auto loans, and the mortgage is usually last, which provides both borrower and lender with some flexibility on exit strategy. So which do you think pose a higher risk to the system? Mortgages or credit cards?

    This discussion reminds me of a book I read a few years ago, “Fault Lines” by Raghuram Rajan, who today is the governor of India’s central bank. He argued even before the financial crisis that loose credit is being used as a social policy tool to reduce the burden on government by feeding consumers with more credit, thereby increasing their spending power and perception of “wealth”, and taking advantage of a phenomenal human weakness. Consumers in turn fuel the economy by spending thereby helping the banking system generate billions of dollars in profit from interest on credit, overdraft fees, transaction fees, business loans, you name it, and in turn the banks have an implicit agreement with the government that when things go wrong the government will bail them out…. because, really, what sane government wants to see the masses lining up at bank machines to empty their accounts? So for those you who believe that unsecured credit is beyond the government’s scope, think again.

  15. As I see it and many brokers as well is that at least a home is a secured debt…secured against something of value. A credit card is only secured against the willingness to pay.

    How many times have I seen someone with 5,6,7 credit cards? Why? Simply the answer is that that part of lending is not being checked by anyone…..not closely enough at least.

    When the government changed the rules to make refinancing a home up to 80% the max what happened? People loaded up their credit cards and/or got more.

    Let me see, would those who supply credit cards like to see you spend money on a credit card at 20% or a mortgage at 2.5%?

    While I don’t know if the 30% default rate on credit cards is correct or not there are two things about the issue. One is that the default rate obviously doesn’t hurt the credit card companies enough to keep them from lending out more unsecured credit card debt to those who are having a problem. The second is that the laws around bankruptcy and consumer proposal need to be changed. It is far too easy for someone to build up debt and walk away from it if the going gets tough. Credit cards are a good portion of that debt.

    Many don’t realize that the path to a good mortgage and rate is diminished after bankruptcy and gone after a second one.

    Gary was right in his comments during this session. I’m glad to see him make that an issue.

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