Towers Of Gold, Feet Of Clay

Author:  Walter Stewart

dscf0119The banks are in business to make a profit.

The world is carved up into lending zones and business quotas are established for each nation. Political stability tops the list of most attractive features for doing business overseas. Canada is one of the most over - banked nations in the world and full branch banking is available wherever you go. In 1974, Jack Mintz, an economist and teacher of banking at Queen's University undertook a study on behalf of The Economic Council of Canada. It's focus was on the rates of return in Canadian banking. "As I got into it more and more, the evidence began to pile up that Canadian banks were making a lot more than their competitors, a lot more than banks in the United States, and a lot more than retail trade. You began to look for reasons why, and it came out to one explanation, and nothing else. Canadian banks didn't face any real competition." Chapter 12: Clout/PG 173. Each branch is operated as a profit center and carefully monitored. You might be inclined to believe that the installation of computers should have made banking easier and more affordable. "Indeed, since the introduction of computers, virtually every bank transaction has shot up, many of them faster than the rate of inflation. If these machines are so marvelous, why are we paying more for services?" Chapter 16: Stick 'Em Up. This Is A Recording/PG 244. Meanwhile, the banking inspector looks for irregularities or any part of the bank's activities that might harm creditors or depositors. He gets paid out of the consolidated revenue fund, which is conveniently repaid by the banks. The same strange arrangement plagues the Superintendent of insurance, for he gets paid indirectly by the insurance companies.  There is evidence that when the banks are allowed to enter new markets, they monopolize and then drive out competition. Then rates are raised which makes banking more expensive for everyone. Some suggested proposals would to remove restrictions on foreign banks in Canada. This would bring some much needed competition. More extreme suggestions are to restrict or prevent banks from competing in fields such as residential mortgages, consumer finance, leasing and RRSPs. Walter Stewart argues that technology was suppose to make our lives more convenient and cost effective. Instead, it has turned out to be more expensive for the Canadian people due to a highly concentrated and uncompetitive banking industry.

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