BRIAN LAGHI , HEATHER SCOFFIELD and STEVE CHASE AND TARA PERKINS
Globe and Mail Update
October 9, 2008 at 10:48 PM EDT
OTTAWA, RICHMOND, B.C. and TORONTO — The federal government is moving to backstop the Canadian banks’ capacity to lend money in an acknowledgment that not even the country’s sturdy banking system is immune to the global financial crisis.
A plan originally earmarked for Friday morning would see the government assume some mortgages currently held by the banks by giving them to the Canadian Mortgage and Housing Corp., a Crown corporation. In turn, the banks might receive CMHC paper – possibly bonds – against which they could use as collateral for their own loans from other banks.
In recent weeks, the big banks have faced a sharp rise in the cost of borrowing money in international markets to cover Canadian mortgages – a situation that puts them at risk of losing ever-increasing amounts of money on one of their core businesses.
Prime Minister Stephen Harper, Finance Minister Jim Flaherty and the banks say no bailout is on the table and the plan falls short of an intervention, but sources told The Globe and Mail Ottawa now recognizes the fast-changing economic landscape requires action to help the banks access cheaper funds to fuel lending.
With the double whammy of the last days of an election combining with the global economic slowdown, the federal government and senior bank executives are hypersensitive. The Conservative Party has been insisting throughout the election campaign that the fundamentals of the economy are strong. But in the past 24 hours a new reality has set in.
Mr. Flaherty, who is expected to be in Washington Friday at an emergency G7 session of finance ministers, had been preparing to make the announcement of a banking plan Thursday, but after word leaked Wednesday night, the plans were delayed, sources say, in an illustration of how important it is for the government to try to control the message.
Pressure from the banks is growing, with executives arguing their sector needs federal help immediately to ease their credit pressure.
Banks want it right now but the Harper government has to reconcile calls for immediate assistance with its insistence the Canadian banking system requires no extraordinary measures.
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Tagged Bad Mortgages, Bank of Montreal, banking system, banks need money, BMO, bonds, canada, Canadian Housing and Mortgage Corporation, cash flow, CHMC, Conservative Party, credit, election, Emergency Meeting, finance, flip flop, G7, housing crash, I thought we did not have any bad mortgages, Jim Flaherty, lending, May, money, mortgages, Reality, Royal Bank, Scotia Bank, securities, Stephen Harper, stock markets, TD, The Fundementals are sound
No. H 218/08
For release – September 5, 2008
FLAHERTY ANNOUNCES FUNDS WILL BEGIN FLOWING TO SPADINA SUBWAY EXTENSION
Spadina Extension to Vaughan
TORONTO — People living and working in Toronto will begin to benefit soon from reduced traffic congestion, shorter commuting times, and cleaner air through the Toronto-York Spadina Subway extension. The Honourable Jim Flaherty, Minister of Finance, on behalf of the Honourable Lawrence Cannon, Minister of Transport, Infrastructure and Communities, today announced that a contribution agreement has been signed by the federal, provincial and municipal governments, meaning that funds for the completion of the project will now begin flowing.
“The Government of Canada is helping to provide the students, commuters, and families of the Greater Toronto Area with transportation options, getting people out of their cars and onto public transit,” said Minister Flaherty. “We are committed to working with our provincial and municipal partners to improve transportation infrastructure across the country. The Toronto-York Spadina Subway extension is an excellent example of how we’re delivering real results.”
The Toronto-York Spadina Subway Extension project encompasses an 8.6 kilometre extension to the Toronto Transit Commission’s Spadina subway line, extending subway service to York University and the Vaughan Corporate Centre. With the signing of the contribution agreement, the Government of Canada will commit to paying up to $622 million under the Building Canada infrastructure plan towards the design and construction of this project. This is in addition to the $75 million already received by the project under the Public Transit Capital Trust.
In addition to the funding being made available for the Spadina Subway extension, several other transit projects in the GTA are being funded by the Government of Canada. They include:
- York VIVA (Phase 1) — $50 million toward a $164 million bus rapid transit project;
- York VIVA (Phase 2) — up to $85 million toward the second phase of this bus rapid transit project;
- GO Transit Rail Improvement Program — $385 million toward a $1 billion project; Through this project, six of the seven rail corridors being used by GO are being upgraded, as well as some work around Union Station;
- Brampton AcceleRide — $95 million from the Canada Strategic Infrastructure Fund toward a $285 million Bus Rapid Transit project;
- Mississauga Bus Rapid Transit — $83 million from the Canada Strategic Infrastructure Fund toward a $249 million project; and
- Toronto Transit Commission Strategic Capital Projects — $350 million from the Canada Strategic Infrastructure Fund towards a $1.2 billion project.
The Government of Canada provided $500 million for public transit infrastructure in Budget 2008. This will provide up to $194.5 million to Ontario under the Public Transit Fund. Under the previous Public Transit Capital Trust, the Province of Ontario has received $351.5 million, which it can use for various transit projects over the next three years. In addition, all Ontario municipalities will continue to receive a GST rebate.
“It’s clear that for the Government of Canada, investing in transportation infrastructure for the people of the GTA has been a key priority,” Minister Flaherty said. “We are delivering on this priority even further today with the Spadina Subway extension.”
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Office of the Minister of Finance
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Posted in Canada, Ontario, Public Transit, Toronto
Tagged David Miller, extention, Flaherty's Gravy Train, Harper, Jim Flaherty, LRT, Mayor, Spadina, spandina extension, Streetcars, Subway, Subway Expansion, Toronto, Toronto Transit Commission, trams, Transit City, TTC, Vaughan, Viva, York University, YRT