Saturday, July 4, 2009

Has Jim Flaherty's Poor Judgement Come Back to Haunt Us?

In May of 2006, in his first budget, Jim Flaherty announced that his government had found a way to make it possible for more people buy homes.

What he didn't say was that it was the result of a deal he made with the now troubled AIG to allow high-risk, 40 year mortgages to infiltrate our banking system.

After many warnings from the financial sector, he then announced that his government acted quickly to stop risky mortgages, the risky mortgages they allowed in, in the first place.

The troubling part of the whole story, is that he committed tax payer money to back up the debts, so if they go into default, the entire burden is on us. And of course, with our economy as it is, the repercussions are beginning to be felt as delinquency is on the rise, and people's mortgage payments are falling behind.

How much will we have to absorb for Flaherty's poor judgement?

Canada's average delinquency rate jumps

A growing number of Canadians have fallen behind on their credit and mortgage payments as unemployment rises, prompting a surge in consumer bankruptcies. It is a situation that is expected to get worse as unemployment continues to grow.

Canada’s average delinquency rate for all types of consumer credit, excluding mortgages, reached 1.52% in May, up 19% from a year earlier, data compiled by Equifax Canada Consulting Solutions showed Friday. The pace of growth accelerated from 13% in April. The delinquency rate is based on payments more than 90 days overdue. ..

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