Banking is a profitable business, which pays well -- if you're an executive. Linda McQuaig writes:
The country's six largest banks are dishing out $15 billion in bonuses this year. But, in the eyes of some, this isn't enough.
Certainly, the notion of bankers suffering as they gorge on $15 billion in bonuses highlights the cavernous gap between the world enjoyed by those at the top and the one occupied by the struggling masses, including bodies we step over on sidewalks surrounding our bank towers.
It also reveals how misleading media reports can be, particularly about high finance, with insiders allowed to peddle their self-serving agendas unchallenged.
Bill Vlaad, president of Vlaad & Co., which monitors bank compensation trends, described the $15-billion payout to bank executives as bleak, while noticing that it could have been worse: "'It could very well have been a bloodbath."
Vlaad's complaint, McQuaig writes, is absurd -- particularly given the protected status of banks:
Banks enjoy a protected position at the top of the Canadian economy. With roots stretching back to before Confederation, the big banks represent the very heart of the Canadian establishment. Over the years, they've developed deeply entrenched connections to Ottawa's governing parties, making it difficult for newcomers to break in.
No matter how enterprising or innovative a Canadian citizen might be, she can't just go out and open a bank. She needs a charter from the federal government, and these aren't easy to obtain.
Yet, despite their privileged perch, Canada's big six banks have gotten away with paying extremely low taxes -- the lowest in the G7. Partly by using tax havens, our wildly profitable banks have managed to reduce their taxes to a rate that is about one-third of the rate paid by other Canadian businesses, according to a 2017 Toronto Star investigation.
And, because they claim the pickings are slim, the banks have been cutting services:
In recent years, they've shut down branches across the country, leaving hundreds of rural and remote communities without a local branch. They've also declined to offer banking services to many low-income people, obliging almost two million Canadians a year to pay the hair-raising interest rates charged by payday loan operators.
Yet, proposals that Canada Post offer banking services at its 6,200 outlets across the country have been opposed by the big banks, which insist that they serve Canadians well.
Clearly, it's more profitable to take the money in than it is to redistribute it.
Image: wongjason.ca
14 comments:
That's why I use a credit union, Owen. That way I get to share in the profits.
Allowing the banks to buy up trust companies and stock brokerages was a big mistake and led to massive concentration in financial services. Letting the banks move into the insurance industry just compounded this error.
With concentration in banking comes concentration of wealth at the top and greater risk of system-wide failure. The banks, of course, like to claim they're "too big to fail," which is just an excuse to hold the government to ransom for bailouts. I'm pretty sure that the lack of action on climate change is to a great extent being dictated by the banks. If oil companies defaulted on billions in loans, we'd have the sort of banking crisis we largely avoided in 2008.
Cap
I read this the other day, Owen, and was hoping you would write about it. I always find that Linda McQuaig's work disturbs me, but in the good way that we should all be disturbed. Have you read The Sport and Prey of Capitalists? As always, she delivers the goods, but it not reading I recommend at bedtime.
All the best to you and your family, Owen, for the festive season.
Which is why many people refer to these vaunted institutions as BANKSTERS rather than bankers, Owen. I just checked my investments and had a look at what interest rate a 1 year GIC would attract. It was an amazing, simply amazing 2%!
Wouldn't you think they could at least match whatever the government decides the official cost of living increase has been? And we all know that is a low-ball figure, don't we?
Bah! Humbug! is all I can muster.
We've retreated on the lessons we learned from the Great Depression, Cap. Allowing banks to buy up other institutions only allows money to coagulate at the top. It dies there and the whole sturcture collapses from the bottom.
I've always had the sense that McQuaig has her hand on the pulse of society, Lorne. She can put seemingly disparate pieces together into a narrative that makes sense. Merry Christmas to you and yours. And let's hope that 2020 is more progressive than 2019.
It's all about the spread in interest rates, Lulymay. Have you noticed that -- like a casino -- the house always wins?
In February, 2018 I did a post comparing Canada's and America's biggest companies. America's giants are tech companies - Apple, Google, Amazon, Microsoft. Canada's three biggest were RBC, TD and BNS. In America, wealth is developed, produced and sold. It's a constant churn of creativity and development. In Canada it's deposited or loaned at interest - a rentier economy. Theirs is dynamic. Ours is, well, banking.
When I practiced I spent a good bit of my time fighting banks. It was plain that our archaic Bank Act handed these companies enormous advantages. On panels and seminars I would try to get seated beside the representative of the banking association. I enjoyed egging them on, knowing how easy it was to make them sound as though the Bank Act was Magna Carta, the keystone to capitalist democracy. It was easy because, in their atrophied souls, they sort of believe that.
Be that as it may, Canada's chartered banks exert enormous influence over our political heavyweights, Conservative and Liberal alike and it's all because of the unearned and undeserved advantages we afford them under the Bank Act.
It was the Bank of Montreal that called the shots when John A. Macdoanld wanted to build the CPR, Mound. And it has been ever thus.
Merry Christmas Owen.
Merry Christmas, Steve.
While the fat cats who run these outfits are stuffing extra millions into their already bulging pockets they're forcing ever more of the slugs on the tools into zero-hour terms. Go back to waiting tables kid, That four-semester college diploma that they sold you is only going to get you a weekly (and sometimes a daily) opportunity to check whether your name is somewhere on the list. "Pick me! Pick me!" You don't even have go to the trouble of laying them off anymore. Just disappear them, so to speak. They'll get the message, Maybe Johnny Friendly can sort it out. Wait a minute. I almost forgot. Unions have served their purpose. You can look up what they were in the hysterical file.
.. As always, thanks for the timely & informative posts, superb links, sage observations.. and the privilege to comment freely.. also props to your commenters.. always a bonus that expands over time.. enriches the topic or adds fascinating side branches.. We will do baked wild salmon rather than our usual turkey breasts wrapped around dressing this year. The Boss has specified so.. with steamed broccoli and wild rice.. preceded by her insane, from scratch crab cakes.. and PEI cultured Malpeque oysters a plenty.. Will raise a toast to all the fine Canadian Indie Bloggers.. all your eloquent compadres.. ie 'the likely suspects' !! Be sure to read the recent Monbiot article re 'Political Rewilding'.. I think you will find it inspiring, optimistic.. indeed a pathway to get Canada untracked politically.. out of the 'bewilderment' so to speak !!
All of this is a reminder that Ayn Rand has become the conventional wisdom, John. Selfishness is now seen as a virtue.
Thanks for the tip, sal. Monbiot is always worth the time. Happy Holidays to you and yours. And luxuriate on those crab cakes.
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