Sunday, 26 March 2017

"Wolves Are In Charge of the Henhouse"

 The following exerts are from articles regarding the issues of deceit and predatory finance in Canada's banking industry. These issues are just starting to come to light as the cracks continue to build on the dam. CBC first began to explore the issue of whether or not your 'Securities Commission' protects you some time ago as we reported here

The following exert is from the latest CBC 'Go Public' report which documents the unethical practices of TD Bank.


Financial advisers also admit deceit 

TD employees tell Go Public the pressure to deceive customers extends beyond front-line staff to workers handling wealth management.
'I have invested clients' savings into funds which were not suitable, because of the ... pressure.'- TD financial adviser 
"We do it because our jobs are at stake," said one financial adviser in Ontario.
She admits she acted in her own interest rather than that of her clients after being put on a Performance Improvement Plan — a program that involves coaching and could result in termination of employment — because she wasn't meeting her sales targets.
"I have invested clients' savings into funds which were not suitable, because of the SR [sales revenue] pressure," she said. "That's very difficult to admit. I didn't do this lightly."

'I was forced to lie to customers'

A former TD financial adviser in Calgary says he would downplay the risk of products that gave him a big boost towards his quarterly goal.
"I was forced to lie to customers, just to meet the sales revenue targets," he said.

"I was always asked by my managers to attach unnecessary products or services to the original sale just to increase the sales points — and not care if the customer can afford it or not."

A financial adviser who worked for six years in Nanaimo, B.C., before quitting says "people eventually snap, or lose all sense of themselves and do anything to close sales."
"I have had multiple conversations with branch and district managers. These conversations led to my being asked if I was still the right fit for the job."



  This issue goes deeper then is yet understood by most Canadians, as we have previously reported when the banks (the big five in particular) own and control the regulators through various means they will call the shots.
 For evidence of these claims see below.

 'Compliance' is simply a Regulatory code word so to speak for cash payments, until the regulators such as the IIROC, the BCSC, the OSC etc. are held accountable to the rule of law and not to themselves in their own sham of a 'court' (Tribunal) we will see nothing change.

 For more on the subject see the following exert from Wolf Street below.


How Solid are Canada’s Big Banks?

“Wolves are in charge of the hen house.”

By Peter Diekmeyer, Sprott Money:

The World Economic Forum consistently ranks Canada’s banks among the world’s safest. Competent regulators have overseen stress tests, tightened lending standards and delinquency rates are low. Demographics are good and the country’s diversified economy is backed by a treasure of oil, wood, gold and other natural resources.
So the experts say.
Institutional investors, relying on the work of Jeremy Rudin, Canada’s chief bank regulator, agree. In fact, Canadian financials accounted for 35.5% of the market capitalization of the benchmark exchange (NBF February).
However this façade hides major uncertainties. Key concerns stand out, which if unaddressed, could spark solvency and liquidity issues in one or more of Canada’s Big Six banks.
The fragilities can be seen in an IMF report, which calculated that Canada’s financial sector accounted for a stunning 500% of GDP in 2012. Today, the assets of the Big Six banks alone are more than double the size of the country’s economy.
Each (RBC, CIBC, Scotiabank, BMO, TD and National Bank) have been designated “systemically important,” which in turn, due to sheer size and interconnectedness, suggests that they are almost certainly “too big to fail.” That means the collapse of any one Big Bank would threaten to trigger systemic implosion.
More ominously, if Canada’s financial system, arguably the world’s best, is riddled with pores, what does that say about the US, the UK, and Japan? Let alone Italy and Spain? Yet signs of fragility are everywhere. Consider:
Complacency following “secret” $114 billion bailout
A quick review of key metrics suggests Canada’s banking sector, which, on the surface, having largely escaped the 2008 financial crisis, has thus learned little from it.

As David Macdonald demonstrated in a paper for the Canadian Center for Policy Alternatives, Canada’s Big Banks benefited from nearly $114 billion in cash, liquidity, and other bailout help from both local and US sources following the financial crisis.
“Three of Canada’s banks – CIBC, BMO, and Scotiabank – were at some point under water,” Macdonald writes. “With government support exceeding the value of the company.”
Sadly, details were largely kept secret, Macdonald says, hidden in footnotes and legalese, where even the term “bailout” was shunned. Reforms that could have strengthened the system were thus avoided and the Canadian public remains largely unaware of the dangers.
(A Canadian Bankers Association spokesperson denied that any Canadian bank was bailed out or was in danger of failing, but conceded that the Canada Mortgage Housing Corporation (“Canada’s Fannie Mae”) bought up $69 billion worth of assets and that the Bank of Canada advanced additional liquidity funding).

“Canada’s Fannie Mae” piles on risk amidst residential real estate bubble

In March, the Economist magazine calculated that Canadian residential housing is 112% overvalued relative to rents and 46% overvalued relative to incomes. Even Canadian bank economists, enablers of previous excesses, now describe average Toronto prices, which surged 23% last year to CAD $727,000, as a bubble.
Canadian banks have lent into much of the excesses and “Canada’s Fannie Mae” (the CMHC) has guaranteed more than $500 billion in mortgages; almost as much as the US GSEs did relative to GDP prior to the 2008 crisis.
Canadian banks have never seen a major real estate implosion
Because Canadian real estate prices never collapsed during the 2008 financial crisis to the degree they did in the US and the UK (let alone Japan), regulators, investors and analysts are totally unprepared for any such eventuality.
As noted above, there are no indications that any Canadian regulatory body such as OSFI or any financial institution has had a Japan style scenario gamed out by independent risk experts. This even though some Canadian demographic trends, particularly with regards to workforce aging and retirements for the coming decade are roughly similar to what Japan’s were, at the peak of its bubble.
Canadians are in record debt
Worse, Canadians are in debt up to their eyeballs. According to Statistics Canada the ratio of household credit market debt (this excludes government, financial and business debts) reached a record 166.9% of disposable income in the third quarter of 2016. That was up from 166.4% in the second quarter.
Inflated asset prices currently keep those debts under the rug. However asset price levels are temporary; debts linger.

Wolves are in charge of the hen house

Another dangerous sign stems from the fact that all key stakeholders that facilitated the 2008 bubbles and ensuing crisis escaped unnoticed. That means the wolves remain in charge of the hen house.
For example, as Macdonald notes in his paper, Gordon Nixon, CEO of RBC, Canada’s largest bank during the crisis, took in CAD $9.6 million in compensation in 2008, and $12.1 million in 2009.
Canadian bank CEOs and directors now figure that they’ll be bailed out and collect their bonuses, no matter what risks they take.
Bank CEOs aren’t alone in escaping blame for running the system into the ground in 2008. Most Canadians wouldn’t recognize David Dodge either. However, as governor of the Bank of Canada, he fostered the easy-money policies which facilitated the debt and asset bubbles that led to the ensuing troubles..

 For the full article please see below,


 As always much more to come..

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