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Liberals’ $160 million Black Entrepreneurship Loan Fund over 4 years, in partnership with 8 financial institutions, is 0.9% of $13.4 billion in 2019 outstanding small business loans in Canada

Black Canadians are at least 3.5% of Canadian population, likely more, and visible minorities 22% in total, so the Fund should be $600 million+

Would be much more effective to enact key measures to stop discrimination and abuse by Canada’s banks – as 95,000+ voters call for

For more than 40 years, U.S. government has required banks, including banks owned by 4 of Canada’s Big 6 Banks, to disclose lending and service records by race, gender, income and neighbourhood, and has also required trillions of dollars in corrective lending after discrimination was revealed

Wednesday, September 16, 2020

OTTAWA – Today, in response to the federal Liberal government’s announcement last week of the Black Entrepreneurship Loan Fund for small businesses of a minimal $160 million over four years, Democracy Watch, along with the more than 95,000 people from across Canada who have joined its letter-writing campaign and/or signed its petition, called on all federal parties to work together in this minority government situation to enact key measures to stop Canada’s big banks from discriminating against any customer.

The U.S. enacted such measures more than 40 years ago, and they apply to the U.S. banks that 4 of Canada’s Big 6 Banks own. As a result of these measures, trillions of dollars in lending and investment from banks and other financial institutions has flowed just since 1996 to visible minority entrepreneurs and low-income communities across the U.S. (See Summary below of the key measures needed)

The approximately $160 million Fund over four years, announced by Prime Minister Trudeau in partnership with Canada’s Big 6 Banks and also VanCity and Alterna Savings credit unions, and some Black-led business organizations adds up to 0.9% of the total $13.4 billion in small business loans outstanding at the end of 2019.

According to the 2016 census by Statistics Canada, Black Canadians make up at least 3.5% of Canada’s total population (approx. 1.2 million people), and possibly more given how the data is collected, and all visible minorities make up a total of 22% of the population (approx. 7.6 million people), plus an additional 5% indigenous peoples (approx. 1.7 million people).

As a result, the Black Entrepreneurship Loan Fund should be at least $600 million over four years, and even more to support other visible minorities and indigenous peoples who suffer from discrimination in business financing. But it would be much more effective to enact measures to stop banks and other business and home finance companies from discriminating.

“The Trudeau Liberal Black business funding program is much too little, much too late, and will do nothing to stop discrimination in lending and financing by Canada’s big banks,” said Duff Conacher, Co-founder of Democracy Watch. “As the U.S. government did more than 40 years ago, it would be much more effective if the federal government required Canada’s banks to disclose their loan records by the race, gender, income and neighbourhood of borrowers, and required them to make corrective loans and investments if they discriminate against any customers.”

Instead of enacting measures like the U.S. decades ago, and despite broad support across Canada for key changes for more than 20 years (mainly by the Canadian Community Reinvestment Coalition (CCRC) coordinated by Democracy Watch), Canadian governments have done nothing to stop discrimination by our big banks.

Canada’s Big Banks track their lending and service in Canada by the characteristics of customers – so they could easily be required to disclose in their annual Public Accountability Statements the same information that the U.S. banks are required to disclose annually.

“If past and current federal Conservative and Liberal party leaders were actually concerned about the economic well-being of visible minorities in Canada, their governments would have long ago enacted measures to track and stop discrimination in lending by our big banks,” said Conacher. “Hopefully, they will soon finally make the changes needed to hold Canada’s big banks accountable for discrimination in lending.”

Former Finance Minister Bill Morneau boasted that the federal government negotiated with the Big 6 Banks to temporarily cut some credit card interest rates for some customers (but not for small businesses) who request a deferral for a couple of months, and to process small business loans funded by the government (which are not being used very much by many small businesses), in addition to the up-to-6-month mortgage and loan deferrals and fee reductions the banks have already offered (but again, only for some customers, with the delayed amount still required to be paid later, plus interest).

However, Prime Minister Trudeau stated on April 6th that “we need to see even more action like this going forward because this is a time to think about each other, not about the bottom line.”

“The federal government cannot tell if the banks are still gouging or treating customers unfairly in this crisis, and won’t be able to tell post-crisis, because the banks are allowed to keep secret the profit levels in each area of their business, what type of borrowers they approve and reject for loan and credit relief, and how many complaints they are receiving,” said Duff Conacher, Co-founder of Democracy Watch. “As the U.S. did more than 40 years ago, the federal government must require the banks to disclose this information and more to ensure the banks give everyone who needs it a real break in their loan and credit card payments during the crisis, and serve everyone fairly and well at fair interest rates and fees that give the banks a reasonable profit and not excessive gouging profit levels.”

Just like the initial spending actions taken by the federal and provincial governments were not enough to address the coronavirus crisis, the banks must do more. The Big 6 Banks’ decade of record profits and cuts to their prime lending rates show that they can afford to cut interest rates much more on loans like mortgages etc., and also to cut fees much more, and not raise them again to their gouging, excessive profit levels.

See Full List of Key Bank Accountability Changes. See Canada’s Big Banks Backgrounder.

As well, enforcement measures and penalties also need to be strengthened to ensure banks, and other financial institutions, serve everyone fairly and well at fair prices (See Backgrounder on Weak Enforcement).

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Duff Conacher, Co-founder of Democracy Watch
Tel: (613) 241-5179
Cell: 416-546-3443
Email: [email protected]

Democracy Watch’s Big Banks Coronavirus Accountability Campaign

Brief Summary of Key Bank Accountability Measures

  1. Discrimination in lending accountability measures

For more than 40 years, the U.S. has required under the Community Reinvestment Act (CRA) banks, including the U.S. banks owned by four of Canada’s Big 6 Banks, to disclose their lending and service record by race, gender, income and neighbourhood, and required them to make corrective loans and investments if they are found to be discriminating against any of their customers.

In the U.S., Bank of Montreal (BMO) owns BMO Harris Bank, Canadian Imperial Bank of Commerce (CIBC) owns CIBC U.S., Royal Bank of Canada (RBC) owns City National Bank, and Toronto-Dominion Bank (TD) owns TD Bank.

The CRA needs to be strengthened, but just since 1996 it has resulted across the U.S. in more than $1 trillion of lending to credit-worthy visible minority and women entrepreneurs, and more than $1 trillion in community development and housing loans, and the CRA has also helped ensure low-income neighbourhoods have access to banking services instead of finding only predatory payday lender outlets in their area.

  1. Fee and interest rate gouging accountability measures

As well Canadian governments have done nothing to stop gouging by our big banks. Canada’s Big 6 Banks reported record profits of more than $46 billion in 2019 – the 10th year in a row, and more than double their 2010 profits. The Big 6 Banks reaped record profits every year for the past 10 years in part by firing thousands of people, shifting jobs overseas (or using temporary foreign workers), cutting services, and hiking fees and credit card interest rates even as the Bank of Canada’s prime rate dropped to record low levels.

The Big 6 Banks also paid their CEOs a total of $75 million in 2019 in salary and bonuses (an average of $12.5 million).

“The federal Conservatives and Liberals have done nothing since 2010 to stop Canada’s big banks from hiking fees and credit card interest rates to gouge Canadians and more than double their profits to the highest levels of banks world-wide, while reducing service, treating many customers unfairly, and exploiting loopholes to lower the amount they pay in taxes,” said Conacher. In this time of crisis, and with the minority government, all parties must work together to make key changes to make banks help more now, to finally stop their excessive profits, gouging and abuse of consumers, and to make banks pay their fair share in taxes.”

See Full List of Key Bank Accountability Changes Needed in Canada.

See Canada’s Big Banks Backgrounder.

See Backgrounder on Weak Bank Accountability Enforcemen in Canada.