Quote:
Originally Posted by Bobblehead
No where does it say they were "bad" mortgages
They were CMHC backed mortgages. In other words, if there was a default CMHC was going to cover the loss anyways.
So before the purchase: CMHC (a crown corporation) is on the hook for defaults
After the purchase: the Canadian Gov't is on the hook for defaults.
It is pretty much the same thing - you and I are on the hook in the case of a default.
This transaction was made so that the banks would no longer have $75 Billion tied up. They now had an additional $75 Billion to loan so that helped free up the constriction in the lending markets. Now the Canadian Government gets the money back as the mortgages are paid off.
It was not a "bail-out". The Canadian government did not accept any bad debt beyond what they were already on the hook for.
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Sure that's what they tried to sells this POS as. Instead we saw the banks use the money freed up to purchase several assets abroad. Mostly troubled US banks south of our border.