Canadian government seeks new bank powers

The Canadian government is seeking new powers to enable it to take a stake in banks and other financial institutions, following the example set by the US and the United Kingdom. ┬á The new legislation would allow the government to inject capital into private institutions or to take over a failing lender and split it into a "good bank" and "bad bank."┬á┬á Minister of Finance Jim Flaherty said in his autumn economic statement that the measures were "in keeping with the action plans we agreed to with our international counterparts at the G7 and G20 meetings." ┬á┬á The minister said that such powers were necessary to give the government "the legal ability to inject capital into a federally regulated financial institution to support financial stability, on terms that would protect taxpayers."┬á┬á Such measures go against the grain of Conservative free-market ideology, and the proposal has met with some internal party resistance, but represents a pragmatic approach in line with the experience of other major countries battling the credit crisis. ┬á┬á There is as yet no suggestion of the government actually using such powers, but it clearly feels they are worth having in the bag if the crisis deepens and a bank or insurance company needed intervention to rescue it quickly. ┬á┬á*┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *