Letter from Bob Olsen on Financial Services Agreement

By Bob Olsen, 3 Feburary 1997

The "Canadian megabank Cleghorn and Barrett say they hope to create will almost certainly be bought by the Americans, Swiss or Japanese."

Thomas Walkom, Toronto Star 3 Feb 98

TO: ALEXA McDONOUGH, MP, Ottawa
From: Bob Olsen, bobolsen@arcos.org Toronto
Date: February 3, 1998
Re: Financial Services Agreement (signed 12 December, 1997)

I commend you for making an issue of the proposed bank merger.

However, I feel that you are missing the real danger, which is suggested by Thomas Walkom in today's Toronto Star (below).

The problem with the proposed merger is not bank charges and customer service, but, Canadian sovereignty. That is the issue that you have not addressed. [SEE note re GB No.180 below]. There is a growing possibility that Canadian banks will go on sale on March 1, 1999.

How would that affect our sovereignty, our ability to control Canada's financial/fiscal policy?

I again urge you to demand the missing information in puzzling out the proposed bank merger, that is the text of the Financial Services Agreement. As I have said before, we probably just need "Canada's final offer" to the WTO Financial Services negotiations which then became part of the FSA. We would not need the entire 1,000 page FSA.

My MP, Bill Graham, told me a few days ago that a signed agreement should be a public document. Therefore, there should be no legal problem in getting a copy.

Will you demand the immediate release of the FSA or "Canada's final offer? If not, why not?

By William Walker, in The Toronto Star, 3 February 1998

New Democratic Party Leader Alexa McDonough, after questioning Martin in the House of Commons about the proposed merger, later told reporters: "Mr. Martin should stop being a wimp."

"The banks are trying to pull a fast one," she argued in the Commons. "They're trying to sell us a monster merger as if it is good for us. . . . Will the minister kill the monster merger today? Will he send it back to the banks stamped NSF?"

"Let me give the minister another chance to stand up for bank consumers, for bank employees and for folks needing credit. Will the finance minister show some guts and bounce the bank merger?" she demanded.

By Thomas Walkom, The Toronto Star, 3 February 1998

This proposed merger, however, is part of a three-part package - one which Cleghorn and Barrett readily acknowledge.

Part one would allow Canadian banks to merge at will. Part two would give foreign banks full access to the Canadian market (they now face restrictions).

As Barrett pointed out in The Globe and Mail yesterday, part two is necessary for part one to work. Unless Canada allows full access to foreign banks, other countries will not give the same privileges to the new Royal-Montreal behemoth.

Part three of the package involves eliminating restrictions on foreign control of Canadian banks. Currently, no foreign individual or company is allowed to own more than 10 per cent of any major Canadian chartered bank.

The proposed merger logically leads to elimination of the 10 per cent rule. As Barrett has noted, if Canadian banks are to be permitted to bid for control of important foreign financial institutions (as the proposed megabank almost certainly would), then foreigners must be granted reciprocity in Canada.

It is these ancillary measures, not the merger itself, which will destroy whatever national independence exists in the Canadian banking system, a system designed to ensure that this most sensitive of industries is at least theoretically responsive to the needs of the country.

Ironically, once the 10 per cent rule is removed, even the new kick-ass Canadian megabank Cleghorn and Barrett say they hope to create will almost certainly be bought by the Americans, Swiss or Japanese. Who else could afford it?

Bob Olsen Toronto bobolsen@arcos.org (:-)

PS: Bob Olsen also noted earlier (SEE Global Brain No.180) that:

"The NDP appears to accept the assumption that we are not citizens, sovereign in our own land, but merely consumers and that the function of Parliament is to protect consumers.

Alexa McDonough and the NDP might possibly succeed in protecting consumers while, at the same time, we lose our rights as citizens to govern our own country. Controlling the money supply etc is the first task of a sovereign people. Once we lose that control, such as it is, we lose any pretence of being citizens, sovereign in our own country."