Huff and Puff About Bank Mergers

So it seems Canada's annual political game is back again. The Finance Minister is talking about Bank Mergers.

Liberalized rules on bank mergers are required, but alone they will do very little to promote Canada's financial sector. Specifically, all liberalized rules on mergers will accomplish in the short run is allowing credit unions, mostly in Quebec, to merge.

The Conservatives should push for deep reforms to our financial institutions. The basis of such reforms must be: 1. uniform financial structure, 2. liberalized banking rules, and 3. deep capital gains tax cuts.

As a federalist it pains me to say that the government of Canada must find a way to make OSC rules uniform across Canada or at the very least come up with a Uniform Securities Legislation. I am told that Quebec is on board with this and the only hold outs are Alberta and British Columbia. To have 6 different issuing rules across this country is absolutely nuts. Canada does not have a big enough capital market for it. More importantly, having to issue 6 different version of the prospectus and filing 6 different times makes capitalization a very expensive process. This is part of the reason why Canadian companies, like Rogers, go down south to get their junk bonds.

Here is what Alberta has to say on the record on this issue. So the Feds should start cornering Alberta into acting already. The most recent proposal does not go far enough. This should be a solely federal responsibility.

Canada's financial sector, thanks to independents on Bay Street and the current situation in the market, is in a great position to grow quickly. The government must stop holding it back.