Big Banks’ temporary mortgage and loan deferrals, and cuts to some credit cards and fees, for some customers are not enough – key measures needed to ensure fair interest rates, fees and treatment of all customers now, and into the future
Big 6 Banks gouged out record profits of more than $46 billion in 2019 – their 10th year in a row of record profits – so they can afford to help more, as PM said yesterday
Loopholes also must be closed to ensure banks pay fair share of taxes
FOR IMMEDIATE RELEASE:
Tuesday, April 7, 2020
OTTAWA – Today, Democracy Watch launched a letter-writing campaign and Change.org petition calling on all federal parties to work together in this minority government situation to make Canada’s big banks do more to help Canadians and small businesses, and pay their fair share of taxes, now and after the coronavirus crisis.
The call comes as Canada’s Big 6 Banks have once again 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 have 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). (See Canada’s Big Banks Backgrounder)
The campaign launches as Finance Minister Bill Morneau is boasting that the federal government has negotiated with the Big 6 Banks to temporarily cut some credit card interest rates for some customers (but no small businesses) who request a deferral for a couple of months, and to process small business loans funded by the government, in addition to the 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).
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.”
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.
All federal parties need to work together now to require the banks:
- To cut all their interest rates and fees in half now, and cut loan payments entirely for anyone who needs it;
- To disclose detailed profit reports after fully independent audits and keep rates and fees at reasonably low levels in the future;
- To empower consumers and increase consumer protection by supporting the creation of an independent, consumer-run bank watchdog group (as recommended by MPs and senators in 1998);
- To disclose approval rates for credit, loans and accounts by neighbourhood and type of borrower, and require corrective actions by any bank that discriminates (as the U.S. has required for 30 years);
- To re-open basic banking branches in neighbourhoods where they closed them in the 1990s to help get rid of predatory pay-day loan companies (and banking at Canada Post outlets should also be allowed);
- To cut bank executive pay down to a reasonable level;
- To pay their fair share of taxes now, and in the future, by closing all the loopholes they exploit (as England and Australia have), and;
- Finally, 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)
(See Full List of Key Bank Accountability Changes).
“The federal Conservatives and Liberals did nothing to stop Canada’s big banks from hiking fees and credit card interest rates to gouge Canadians and more than double their profits since 2010 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 Duff Conacher, Co-founder of Democracy Watch. “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.”
“Because the big banks control more than 90 percent of the banking market in Canada they can hike fees and interest rates whenever they want, and treat customers however they want, and so the federal government must finally make key changes to protect 30 million bank customers from gouging and abuse during this crisis, and into the future,” said Conacher. “Every dollar of excessive profit for the banks, and every person and business the banks unjustifiably cut off from credit, costs the Canadian economy because it means that the banks are overcharging for their essential services and loans, and choking off the spending and job creation that will help Canada recover from this crisis.”
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FOR MORE INFORMATION, CONTACT:
Duff Conacher, Co-founder of Democracy Watch
Tel: (613) 241-5179
Democracy Watch’s Big Bank Coronavirus Accountability Campaign