Vested Interests – “Are the developers and the condo industry and others really pushing the government hard saying you’ve gotta have a big CMHC to get more people into this market or we can’t sell that product?”

From BNN interview 17 Jan 2011 5:40pm with Neil Mohindra, Director Centre For Financial Policy Studies, Fraser Institute [hat-tip vancouvercondo.info] –

Interviewer: “What might surprise a lot of viewers is that fully 70% of existing Canadian mortgages are 100% guaranteed by the CMHC. I mean, why do you think Flaherty and others weren’t taking a harder look at that today and pulling the balance sheet of CMHC back towards more of its historical average which is almost a fifth of its current size. Are the developers and the condo industry and others really pushing the government hard saying you’ve gotta have a big CMHC to get more people into this market or we can’t sell that product and construction and housing is part of our national economy is going to suffer?”

Mohindra: “To the extent [that] those industries lobby, I don’t know. I’ve certainly seen testimony on the House of Commons Finance Committee, and the Senate Committee on Banking, Trade and Commerce, where those industries have made those types of points, and so they are very much in favour of the current system. Certainly it works very well for the banks as well, because, they take the returns and for the premiums their customers pay, all the risk is handed over to the taxpayers. So they get the returns, and the risk is on the taxpayers.”

2 responses to “Vested Interests – “Are the developers and the condo industry and others really pushing the government hard saying you’ve gotta have a big CMHC to get more people into this market or we can’t sell that product?”

  1. He seems to get the overall problem but unfortunately there was little in the way of actual numbers.

    The real problem CMHC and the government face is whether or not CMHC will be required to insure high ratio loans as prices are falling. That could add tens of billions to a government bailout.

  2. Not exactly Vancouver, but I saw this blog entry dragged up by Mish. http://tinyurl.com/2vk4w5
    Greg Swann, Phoenix realtor slamming the idiotic economic analysis of the brown-shirted mom’s basement dwelling losers (his words, a bit re-arranged) who dare to question the inevitable 6%+ growth in the best place on Earth, Phoenix, Arizona. He goes on to list 21 reasons why it is different there, and you had better join the gravy train to your wildest dreams before you are priced out forever by rich foreigners.

    Currently Phoenix is off almost 60% from when he penned that little piece. And foreclosures are still surging.
    But hey, Vancouver really is different, unlike those pretenders to the crown.

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