The broker channel can chalk up a win for monolines following Tuesday’s budget meeting, with Finance Minister Jim Flaherty
taking steps to arm “smaller banks” with the tools to better compete with the big banks.
The 2014 federal budget will make it easier for new banks to enter the market while also improving access to Canada Mortgage and Housing Corporation programs for small mortgage lenders, reports the Financial Post.
Released on Tuesday by Finance Minister Jim Flaherty, the budget seeks to “improve the ability of new entrants and smaller banks to compete” while preserving the strength of the sector. Additionally, the Office of the Superintendent of Financial Institutions has appointed a new representative to establish contact with those small banks and handle some of the issues they face competing with the Big Five banks.
In order to ensure this, the government has promised that the smaller banks will have easier access to funding from CMHC. The corporation's new allocation methodologies will undergo restructuring to increase the access smaller lenders have to portfolio insurance and securitization programs.
“I sure hope (there’s more competition),” Gregory Thomas, executive director of the Canadian Taxpayers Federation told the Financial Post. “Canada could use one or two strong national credit unions.”