CanPol: Layton goes off the deep end

[Asher]

Originally posted by snoopy369
Anyone can apply for an account, what are their criteria for accepting that application, though? You may not know people who are in the category of 'unable to open a checking account due to credit unworthiness' but I do ...

Well, I opened an account as an unemployed high school student at age 15...they had no problem.

[Victor Galis]

Originally posted by Asher
Sounds to me like a couple people who can't choose their banks properly want to forgo the competitive marketplace in favour of government handholding.

Competitive markets are the greatest delusion we suffer from in our study of economics. You can't honestly expect me to believe that a sector with like six major players tops has perfect competition. We're talking government regulation vs. oligopoly here. I'm not sure I oppose more government regulation in this market.

Banks are supposed to make money by loaning your money at higher interest rates than you deposited at, they're not supposed to make money by charging you for the priviledge of letting you keep your money with them. You're doing them a favor by putting your money in an account at their bank, not the other way around.

[Asher]

Originally posted by Victor Galis
Competitive markets are the greatest delusion we suffer from in our study of economics. You can't honestly expect me to believe that a sector with like six major players tops has perfect competition.

On the contrary, if you'll notice I've said several times in this thread that the Canadian Government intentionally restricts how many banks we have. They won't grant any new banks the ability to do business, so why is it surprising we're in this boat?

The government set up an oligopoly and refuses to permit true competition, that's the problem here. Less government handholding and more competition.

If this is such a huge deal to so many people, it stands to reason an upstart bank who forgoes this kind of nonsense will get a lot of patrons...causing others to follow suit (eg, what happened in the UK).

[notyoueither]

Originally posted by Asher

If you're concerned about principle and people making money off of services (like you make money off of products), then dig a hole in your backyard and bury your cash.

There's no room what with the bones of all the people I've oppressed.

[Kontiki]

Originally posted by Asher

On the contrary, if you'll notice I've said several times in this thread that the Canadian Government intentionally restricts how many banks we have.

Except that they don't. The government regulates federally chartered financial institutions through the Bank Act, and none of the regulations make it especially difficult to set up shop provided you have a minimum of $10 million capital. The reality is that it doesn't make alot of sense for anyone domestically to set up a traditional format bank to compete with the big boys, because they simply can't. We have, however, seen many foreign banks enter the marketplace in the past few years, as well as new eBanks like Manulife, Citizens Bank and your favorite PC Financial. There are also credit unions which are provincially regulated.

[Asher]

PCFinancial is actually CIBC.

[Kontiki]

Not exactly. PC Bank uses CIBC products and services (among others), but offers them through independent channels (namely themselves) and are a seperately chartered entity. They actually seem to make most of their money through their credit card operations.

[Asher]

Originally posted by Kontiki
Not exactly. PC Bank uses CIBC products and services (among others), but offers them through independent channels (namely themselves) and are a seperately chartered entity. They actually seem to make most of their money through their credit card operations.

PC Financial is operated by CIBC's direct banking arm. The debit cards say "Property of CIBC" on them.

PC Financial is a member of the Canadian Bankers Association as a subsidiary of CIBC. Not too long ago it was owned technically by Amicus Bank, who themselves were a wholly owned subsidiary of CIBC.

No matter which way you wanna argue about it, PC Financial is by CIBC. It's basically just a brand.

The mastercard is the only part of PCFinancial that's not done with CIBC (it's actually done via Loblaws).

[Kontiki]

Whatever. It's a joint venture. As I said, the banking services are offered through CIBC. That's why the debit cards would say "Property of CIBC". CIBC has no part in the credit card operations, insurance or PC Points system, all of which are part of PC Financial.

All of this, of course, is really just symantic bull**** and nickpicking on a minor point after your claim that the government intentionally restricts the number of banks was shot down. It's the typical tactic that makes arguing with you so much fun. Have a good night.

[Tingkai]

It should be obvious that banks are an essential service that everyone needs, unlike popcorn.

It should also be obvious that with many banks are charging $1.50 per ATM withdrawal then there is price fixing in the market, which the banks can do because they have oligopolitic power.

And the bit about "free withdrawals" is a joke. Banks typically have only 2 free withdrawals a month. That means people have to withdraw all their money when they get paid.

It should be obvious that eliminating fees on ATM usage will not bankrupt banks. Banks made $19 billion in profit last year. ATM fees gave them $440 million.

Consumers do not have choice. Asher talks about PCFinancial, but this service is not available in many Canadian communities, particularly in Western Canada. Yes, it is available online, but many Canadians do not have computers, or not comfortable using online banking. So these people face limited consumer choices.

Given the banking industry is not a free market, and never will be, and given the banks are abusing their market power by creating unreasonable fees, it certainly makes sense to limit their power.

[DinoDoc]

Originally posted by Tingkai
Banks typically have only 2 free withdrawals a month. That means people have to withdraw all their money when they get paid.

Really? I only get charged if I'm stupid enough to use an ATM from another bank. Is that truely not how it works in Canada?

[Spiffor]

I don't get charged when I take cash from any French or Euro-zone ATM. Anything else is barbaric.

[Asher]

Originally posted by Tingkai
It should be obvious that banks are an essential service that everyone needs, unlike popcorn.

It should also be obvious that with many banks are charging $1.50 per ATM withdrawal then there is price fixing in the market, which the banks can do because they have oligopolitic power.

And the bit about "free withdrawals" is a joke. Banks typically have only 2 free withdrawals a month. That means people have to withdraw all their money when they get paid.

So switch banks. You act like you're powerless. You're not.

Consumers do not have choice. Asher talks about PCFinancial, but this service is not available in many Canadian communities, particularly in Western Canada.

WHAT??? It's huge in Western Canada...

Yes, it is available online, but many Canadians do not have computers

You can do telephone banking as well, but last I checked the vast majority of Canadians did have computers.

or not comfortable using online banking. So these people face limited consumer choices.

Can do telephone banking, then.

There are also many plans for the banks that offer unlimited transactions.

[Asher]

Originally posted by Kontiki
Whatever. It's a joint venture. As I said, the banking services are offered through CIBC.

And as I said, we're talking about the debit/ATM/banking system. Which, in PCFinancial, is a rebranded CIBC. I can even go into a CIBC branch and get a certified cheque.

All of this, of course, is really just symantic bull**** and nickpicking on a minor point after your claim that the government intentionally restricts the number of banks was shot down. It's the typical tactic that makes arguing with you so much fun. Have a good night.

When was the last time a schedule I bank was authorized? 50, 60 years ago? And why is that?

It is currently not possible for major US banks (the easiest source of competition) to become a schedule I bank in Canada with all of the branches, ATMs, etc -- for example.

http://www.fin.gc.ca/taskforce/pdf/norwest1.pdf

Canada is the only G-10 country that restricts foreign bank entry to separately organized and capitalized subsidiaries.

[Kontiki]

Originally posted by Asher
When was the last time a schedule I bank was authorized?

Several over the last few years actually. Bank West, Manulife Bank, PC Bank, Pacific and Western Bank, Citizens Bank, Canadian Tire Bank, PC Bank, etc.

It is currently not possible for major US banks (the easiest source of competition) to become a schedule I bank in Canada with all of the branches, ATMs, etc -- for example.

Considering Schedule 1 Banks, by definition, are domestic it would be odd for a US bank to become one. Foreign Banks (including US Banks) can become Schedule 2 or 3, and there are several within Canada. HSBC has a full branch network, albeit smaller than the big five. Citibank or BoA, for example, are free to do so as well, they just haven't chosen to.

http://www.fin.gc.ca/taskforce/pdf/norwest1.pdf

Canada is the only G-10 country that restricts foreign bank entry to separately organized and capitalized subsidiaries.

It helps to keep up to date.

http://www.cba.ca/en/ViewDocument.asp?fl=4&sl=337&tl=363&docid=722