CIBC warning on risky lenders

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The shadow lending market is growing as tighter regulations force the major banks into tighter controls. The Bank of Canada raised concern on the growth of unregulated lenders, sometimes attached to the pay-day loan sector, last year and now an economist from CIBC World Markets has expressed his doubts. Benjamin Tal told The Financial Post that increased regulations on the major lenders is likely to increase the margin between them and the shadow market. He explained: “If you are a regulator, and you are imposing more and more regulations on those that are regulated, those financial institutions cannot do all the business that they want to do.” That, he said, would push more borrowers towards the unregulated sector and increase the risk in Canada’s credit profile. Read the full story.
 
  • Dave on 2015-02-19 8:51:53 AM

    Meanwhile the banks have completely different rules than broker lenders and their own 'shady' deals are being done. Whole industry is run by the banks , not the government.

  • Hugo Dos Reis on 2015-02-19 10:12:24 AM

    Interesting to hear this from CIBC. I had reviewed a deal for a client that couldn't get done on the "A" side without a co-borrower. Client advised he took it to CIBC and they made it work, despite the ratios being completely off... Not the first time either i've lost something to CIBC. Some of these branch sales people have their own authorization limits, so deals are getting pushed through that shouldn't be.

  • John Woods on 2015-02-19 2:17:14 PM

    Even though I have a great deal of respect for Mr. Tal, the age old expression "people in glass houses should not throw stones" comes to mind.

  • Ron Butler on 2015-02-19 2:44:44 PM

    I think Mr. Tal's focus is actually on the people who are putting money into shadow banking. The question is with millions a month pouring into MICS and mortgage syndications is the INVESTOR being properly disclosed all of the risks, are these quality mortgages with strong property values or speculative flyers with voodoo valuations. Tal's comments are valid within the context of the what will happen to the investors that create the shadow banking world if the lending is reckless.

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