Saturday, January 28, 2012

Bank Liars

The Bank CEOs have become veritable Pinocchio's. They or their economists keep sounding the alarm about the highest level of consumer debt ever, the housing bubble etc and yet the banks are trying to convince consumers to take on even more debt!

Contrast what they have said with what the banks are doing:

1) Nixon. CEO of Royal Bank:

"When you look at markets like Vancouver and Toronto there is a level of caution from a risk perspective that is higher today than it would have been a couple of years ago," he said.

"When you look at the condo side there is probably vulnerability ... it is the area which is most vulnerable with respect to Canadian housing."

2) Downe CEO of Bank of Montreal

Bank of Montreal president CEO Bill Downe agreed there is a risk of a downturn in the housing market, saying the best hope is for a soft landing.

"There is no question that the warning signs around the Canadian housing market have been visible for more than a year," he said, also mentioning Toronto and Vancouver specifically.

3) Clark CEO of TD Bank

However, given that the ratio household net debt to income levels sits at a historic 150% — meaning mortgage and other debts are 1.5 times a Canadian household's average income — it would be risky if debt levels rise further.

Here's what their banks are doing:

Bank of Montreal just had a gimmicky 5 year 2.9% mortgage to squeeze a few more buyers into debt before the 'best case soft landing ' comes along.

Hat tip to VREAA

Meanwhile here's what Scotiabank says: However, household spending gains will be dampened by weak job creation and rising consumer debt, now at record levels.

You know Scotiabank, they guys who have come up with the 'You are Richer than You Think' ad line. What does that mean?? Most of us are more indebted than ever and are suffering with stagnant wages and yet we are supposed to be richer??


BTW how much do they get paid. About $8 -16 M a year- then there are benefits and pensions to add in.


Surrey including Whiterock (where there have been some HAM sightings)

1682 SFH listed.
102 sales since Jan 1st
167 if you go back all the way to Dec 15th to date.

Either way a lot of inventory and not much interest. Haven't been there for a while, but I think I will go down next week-end and see the forest of for sale signs where there used to be real forests :)


  1. Who rely on the current orchestrated repressed interest rate(s) for their profits, other than local/fed governments and crown corporations / state owned enterprises who took on most of the debt in the past years?

  2. Love you for Surrey numbers. They rock, my world atleast!!!!!! yayyyyyyyyyy

  3. Any time anon
    If you are interested in condos as well I could look those up too

  4. Nah, drop it. I can always check condos in month stats release by FVREB. Who wants to read about condos in Surrey. I am sitting on a thick wad of cash. Bring it on baby, crash crash crash.

  5. sorry I meant who wants to live in condos in Surrey.

  6. Ed Clark regularly makes appeals to the government to raise CMHC requirements. When he is asked why the bank doesn't ask for anything more than the minimum he is straightforward about it. He says the rules have to be put into place for everyone and that TD can't act alone since the other banks would take away TD's mortgage business if it did. I do agree with you about the BMO move.

  7. Panda- that sounds like Chuck Prince of CITI when asked why they kept lending on housing when the parameters were so bad and kept trading until they nearly went into bk -saved by $450 Billion of tax payer money...'While the music is playing you have to keep dancing'. Sounds like the war crimes soldiers blaming 'orders' for their atrocities.

    Why do these guys get paid ten of millions if they cannot use some common sense.

  8. There are lots of bank practices that are difficult to defend.

    At least Clark lobbies to have CMHC requirements tightened (did Prince argue for the equivalent in the States?). I'd be more critical of some of Clark's competitors who argue for keeping the status quo for CMHC.

    Clark's take on offering long amortization mortgages at TD is simple enough. When there is an absence of government leadership, the result isn't pretty:
    “The reality is it’s not like we don’t offer 25-year amortization mortgages or 20-year amortization mortgages. People can pick their amortization periods. But if you offer them more choice, overwhelmingly they will choose the longer period, and so the question, is would one bank say, ‘Well, I don’t care what you want; we’re going to only offer 20-year amortization mortgages,’ while everyone else offers a 30-year amortization? We know what would happen – TD would no longer be issuing mortgages and everyone will go across the street. That’s what the public has said by the way they act.”

  9. Hi fish

    You said for Surrey

    "1682 SFH listed.
    102 sales since Jan 1st"

    This site here ( )says 91 sales for 2 weeks period and 1344 total listings. Are there only 11 sales for 1st 12 days of Jan in Surrey. And why such big difference (338) in total listings. no offence to you, but his data looks more close to ground reality, which is a tad over 7 MOI, where as yours is more like 13 MOI. Could you recheck your data please. Maybe there is something missing. I know by this coming weekend, FV will publish data, but I am more concerned going forward. :-)

  10. I include South Surrey White Rock. maybe he doesn't. Them's the numbers.

  11. then your sales should be high too. maybe he is wrong. i like bearish numbers, so I prefer you to be right than him ;-). LOL. Thanks once again for taking the pain.

  12. 'Are there only 11 sales for 1st 12 days of Jan in Surrey'

    It's possible:

    Fish10Jan 20, 2012 10:09 PM
    Surrey areas- 1634 SFH. 10 sales last week.

    The numbers sure look super bearish. Lets see what the FVREB has to say in a few days

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