“It’s just not realistic in a competitive marketplace to say, ‘Why doesn’t one bank lead the way and change the rules?’ It won’t happen. This is a responsibility of the government,” Ed Clark, who will step down as CEO of TD Bank in November told Reuters. “I get why they keep worrying about doing it. But I think you have to just keep touching this brake. As long as you run low interest rates, you then should be continuously leaning against asset bubbles.”
Credit debt to disposable income -- one way of determining debt burden – rose to 163.6 per cent in the second quarter of 2014 and many brokers believe it is unsecured debt, and not mortgage debt, that should be more closely watched by the government.
So while they will likely agree with Clark’s sentiments, they may also view them as hollow.
“Ed is hoping that some empty platitudes on his way out the door will cast a more favourable light on his legacy,” David Larock of Integrated Mortgage Planners wrote on MortgageBrokerNews.ca. “The record will show that on his watch TD aggressively loosened its credit policies with market-first initiatives like 125 per cent registrations, and that his bank also quietly implemented anti-consumer mortgage policies like fixed-rate collateral mortgage collateral charges and the cross-collateralization of unsecured TD debts.
“Your actions spoke more loudly than your empty words do now, Ed.”
Clark has served as CEO of Canada’s second largest bank since 2002. He will be replaced by TD COO, Bharat Masrani.
Brokers may be happy to see one big bank executive go, but they likely won’t fall for his parting words about the need for tighter lending rules to help rein in consumer debt.