TD Understands Ottawa’s Position – Give Me A Break!

Ed Clark, the CEO of Canada’s second largest bank supports Jim Flaherty’s recent move to prevent banks from competing on low mortgage rates.  In a statement after yesterday’s annual shareholder meeting Mr. Clark remarked “I think we understand his concern, we’ve been an advocate all along”.

In March Mr. Flaherty took the controversial step of contacting 2 of Canada’s banks, warning them against offering low mortgage rates.  Mr. Flaherty was later quoted defending his actions as necessary to prevent Canadians from borrowing more than they can afford.

TD Bank, like all of Canada’s banks has tightened mortgage rules significantly over the past 4 years to ensure borrower eligibility.  They are in complete control over who they loan money to and at what mortgage rate.  Global economic conditions and low inflation have brought down the banks’ cost of funds and has in turn given them plenty of room to drop mortgage rates.

TD Bank’s dream scenario is to only offer mortgages to AAA borrowers at above market or “B” mortgage rates.  No risk lending at a high profit margin is not a naturally occurring phenomenon.  This can only occur through collusion or price fixing and Ed Clark is all for it.  If the Canadian government is involved, then all the better.  It’s not TD Banks idea to charge us a higher mortgage rate.  This is Ottawa’s idea, but TD certainly understands.  Give me a break Ed Clark!

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