Maybe it's the right thing to do but it is contrary to what we have been told is necessary.
According to an article today by the Canadian Press:
"The [finance] minister said his government is looking at steps to increase the money flow in Canada, including using the Canadian Mortgage and Housing Corporation (CMHC) to take some mortgages off the books of chartered banks, leaving them with additional assets." (Canadian Press, October 9, 2008)
The Globe and Mail also reported that under the Conservative plan, the CMHC would "absorb some of the banks' mortgages. In exchange, CMHC would give the banks securities with the CHMC stamp.. That would leave the banks with assets that other lenders, including the Bank of Canada, would be willing to accept as collateral for short-term loans. That, in turn, would allow them to increase their own ability to lend." (Globe and Mail, October 9, 2008)
When asked this morning if the Harper government was working on a plan to expand CMHC mortgage securities in order to add more liquidity in the market, the finance minister replied: "To answer your question directly, yes we are looking at additional steps that could be taken."
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