Are you worried because of all the instability in the U.S banking system? The sub prime melt down, foreclosures and the long list of banks closing their doors. Do you think that we are immune up here in Canada? Well we are and we aren’t, let me explain.
Well thanks to the fact that our banks have large national branch networks, rather than where our American neighbor’s banks are mostly regional focused. We have deposit insurance (provided by CDIC) as do our American friend’s (FDIC), however that will not help the over 10,000 clients of Indy Mac Bank who have deposits or investments in excess of the insured limits. Our strength truly lies in our limited number of charted banks and our national network.
Have there been effects here in Canada, yes there have. Just in the past year alone, several of our key alternative or sub prime lenders have either scaled back, pulled out or shut down entirely. Here is a short list and it is by no means complete, GMAC, Accredited Home Lenders, Money Connect, Xceed and just recently the involvement of our federal government pulling 40 amortization’s and dropping the 100% financing.
Now have we ever had a bank failure here in Canada? Yes we have had many, CDIC’s own website list’s at least 43 examples since 1970 but none since 1986! Even during the great depression when most of the U.S banks were closing their doors our banking institutions remained mostly intact.
O.K, Here are the 3 things you must do to protect yourself financially!
1) Know how much CDIC will insure you for in the event of a failure? Don’t get caught not knowing!
2) If you bank with one of the big 5 charted banks, your chance of experiencing a failure is fairly slim to none.
3) If you mortgage bank fails, keep making your mortgage payments. The loans that are on the books will be bought by another lender. Just because the above lender is no longer lending does not mean that you can get off scott free.
The fact is we’re living in a crisis, right now, and there will be both winners and losers. Those who take action – prudently, immediately – can protect themselves. Those who lose are most likely going to be those who thought they were safe.
Honestly, the situation is likely to be unfolding rapidly over the next few months, and anyone who claims to have all the answers is either misguided or misleading you. As a professional I am closely monitoring the situation – and I want to hear from you. What are your questions? What do you want to know?
Ask your question by posting a comment on this blog, and I will research and reply shortly on this blog. Everyone needs to know the answers.