Island Dweller—he of the block quote—swung by the Castle lobby bar last night with a piece of paper in his hand. The paper was a printout from a website.

Most magnificent Czar, etc & etc . . .

A forum I frequent had someone who lives in Canada post this just a day or so ago:

From the 2013 (Canada) economic action plan,page 144 and 145.

Establishing a Risk Management Framework for Domestic Systemically Important Banks

Economic Action Plan 2013 will implement a comprehensive risk management framework for Canada’s systemically important banks.

Canada’s large banks are a source of strength for the Canadian economy. Our large banks have become increasingly successful in international markets, creating jobs at home.

The Government also recognizes the need to manage the risks associated with systemically important banks—those banks whose distress or failure could cause a disruption to the financial system and, in turn, negative impacts on the economy. This requires strong prudential oversight and a robust set of options for resolving these institutions without the use of taxpayer funds, in the unlikely event that one becomes non-viable.

The Government intends to implement a comprehensive risk management framework for Canada’s systemically important banks. This framework will be consistent with reforms in other countries and key international standards, such as the Financial Stability Board’s Key Attributes of Effective Resolution Regimes for Financial Institutions, and will work alongside the existing Canadian regulatory capital regime. The risk management framework will include the following elements:

Systemically important banks will face a higher capital requirement, as determined by the Superintendent of Financial Institutions.

The Government proposes to implement a “bail-in” regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants.

Systemically important banks will continue to be subject to existing risk management requirements, including enhanced supervision and recovery and resolution plans.

This risk management framework will limit the unfair advantage that could be gained by Canada’s systemically important banks through the mistaken belief by investors and other market participants that these institutions are “too big to fail.”

If you have anything in a bank, get it out now.

Make your preparations, a storms a ‘comin

Good luck to us all, may whatever gods you pray to protect and preserve us. God Speed

Obviously this person believes the Canadian government/banks will use the depositor’s funds to help set right the bank’s mistakes, thus minimizing the impact on the average Canadian taxpayer and bank management (” . . . the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities (depositor accounts?) into regulatory capital” (funds for the Canadian govt to help get the bank back on its feet). I don’t doubt there are certain bank accounts in this country, currently tax-exempt, that are being hungrily eyed by regime bureaucrats to be used, once the rules are changed, as a source of additional revenue to feed the ever-ravenous government’s appetite. This situation appears to be slightly different, in that the actions specified intend to restore a major bank to a sound financial condition, not enhance tax revenues.

I don’t follow every aspect of our capitalistic system as perhaps I should, but have you heard of this north of the border?

ID

Um, no. But the Canadian banking system is different in many respects from the American banking system: in some respects, Canadian banks are more regulated than American banks. on the other hand, they did not undergo the same restructuring that their American cousins did in the 1930s, making them comparatively less regulated.

Frankly, the idea that a mismanaged bank should pay for its own mistakes is a wonderful application of the free market. Here in the US, of course, you have the FCIC offering Federal backing to the bank’s cash flow. In other words, how that could work well for both the US and Canada is straightforward—the bank is on the hook for its own debts, and it must use bankers’s* deposits just as any company needs to use its own capital. However, if a banker wants to withdraw money from his or her account, the FCIC will guarantee the money will be there.

In fact, that is pretty much how it was supposed to work in the United States until 2009. God, or ‘Puter, only knows how it works today Hyper-Regulation and Change.

* In the banking industry, the “banker” is the person or entity depositing or withdrawing funds, not the person behind the counter or in the corner office.

The Czar of Muscovy

Божію Поспѣшествующею Милостію Мы, Дима Грозный Императоръ и Самодержецъ Всероссiйскiй, цѣсарь Московскiй. The Czar was born in the steppes of Russia in 1267, and was cheated out of total control of all Russia upon the death of Boris Mikhailovich, who replaced Alexander Yaroslav Nevsky in 1263. However, in 1283, our Czar was passed over due to a clerical error and the rule of all Russia went to his second cousin Daniil (Даниил Александрович), whom Czar still resents. As a half-hearted apology, the Czar was awarded control over Muscovy, inconveniently located 5,000 miles away just outside Chicago. He now spends his time seething about this and writing about other stuff that bothers him.