Comments on: What does it mean for the Canadian economy as government and banks face off http://blog.communitylend.com/2008/12/18/what-does-it-mean-for-the-canadian-economy-as-government-and-banks-face-off/ Starting the conversation about P2P Lending in Canada Thu, 09 Sep 2010 05:55:02 +0000 hourly 1 http://wordpress.com/ By: Alan http://blog.communitylend.com/2008/12/18/what-does-it-mean-for-the-canadian-economy-as-government-and-banks-face-off/#comment-345 Alan Tue, 23 Dec 2008 01:11:11 +0000 http://blog.communitylend.com/?p=212#comment-345 The government giving (lending) money to banks only results in fatter reserves (which is a good thing to a limit). Little of this money appears to be getting out into the wild where it will do any good for the economy. As Colin/FT suggests, a mechanism to get the cash into the hands of businesses who can put it to work somewhat quickly is the best approach. Infrastructure spending is another way, however it takes years to plan major projects and many have to go through various reviews before they are approved. The only fly in that ointment is that government agencies are very lax lenders, unlike banks who are invested in their large borrowers. The government giving (lending) money to banks only results in fatter reserves (which is a good thing to a limit). Little of this money appears to be getting out into the wild where it will do any good for the economy. As Colin/FT suggests, a mechanism to get the cash into the hands of businesses who can put it to work somewhat quickly is the best approach. Infrastructure spending is another way, however it takes years to plan major projects and many have to go through various reviews before they are approved.
The only fly in that ointment is that government agencies are very lax lenders, unlike banks who are invested in their large borrowers.

]]> By: Dan Dickinson http://blog.communitylend.com/2008/12/18/what-does-it-mean-for-the-canadian-economy-as-government-and-banks-face-off/#comment-342 Dan Dickinson Fri, 19 Dec 2008 16:24:51 +0000 http://blog.communitylend.com/?p=212#comment-342 Meanwhile another governmental agency -- OSFI -- is <a href="http://www.financialpost.com/story.html?id=1078752" rel="nofollow">quietly telling banks to 'replenish reserves'</a>, and warning them that capital requirements are going up next year. Tough to know who to listen to, but when in doubt, I think you listen to the guy who can sanction you. Meanwhile another governmental agency — OSFI — is quietly telling banks to ‘replenish reserves’, and warning them that capital requirements are going up next year. Tough to know who to listen to, but when in doubt, I think you listen to the guy who can sanction you.

]]> By: Colin http://blog.communitylend.com/2008/12/18/what-does-it-mean-for-the-canadian-economy-as-government-and-banks-face-off/#comment-341 Colin Fri, 19 Dec 2008 05:26:42 +0000 http://blog.communitylend.com/?p=212#comment-341 Turns out the Financial Times suggested a clear solution - Government lend directly to business - this would encourage banks to do the same. <a href="http://blogs.ft.com/wolfforum/2008/12/how-to-give-banks-confidence-to-lend-to-businesses/" rel="nofollow">How to give banks confidence to lend to businesses</a> <blockquote>Is there anything more the government could do? Yes, it can go beyond intervening at the level of the financial sector and intervene in lending to companies. It can take on itself some of the credit risks involved in extending substantial new lending to businesses.</blockquote> Turns out the Financial Times suggested a clear solution – Government lend directly to business – this would encourage banks to do the same.

How to give banks confidence to lend to businesses

Is there anything more the government could do? Yes, it can go beyond intervening at the level of the financial sector and intervene in lending to companies. It can take on itself some of the credit risks involved in extending substantial new lending to businesses.

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