The lambs lie down on Bay Street

Personally, I am presently ashamed to say that I worked on Bay Street for the better part of the last 20 years, as I watch Bay Street tacitly allow the 2.5 million lambs who bought income trusts be taken off for slaughter. For lambs they truly are. These are honest hard working people, the backbone of our country, people who were deluded by the highly opportunistic falsehoods of their Prime Minister that their investments were safe from any future capricious acts of HIS government. Harper’s government actively encouraged people to believe this was an asset class that would be free from cavalier fiscal changes. All of that proved to be an outright falsehood and blatant lie.

Even worse, than the original sin of misleading people was the vastly greater sin of the fabricated reasons why the promise had to be broken. There’s no two ways about it, every segment of the Canadian society would have been better off if BCE had become an income trust rather than suffer the fate that ensued. We were predicting that inevitable fate the very first week of November 2006, so to say it wasn’t foreseeable would only be the statement of a highly incompetent or dishonest person. This is where the sin of omission of Bay Street comes in. The enormity of their silence carries with it the profound guilt of similar acts of silence of the past. To say they didn’t know better or know at all is a totally vacuous defense, both professionally and morally. Who better than our five chartered banks to know about finance? Who better than our five chartered banks to ascertain the truth about the false proposition known as tax leakage? Who more than our five chartered banks would want to uphold the integrity of our capital markets in the eyes of investors, both domestic and foreign? Who more than our five chartered banks would want to preserve this unique and vibrant ”made in Canada” market that brings Canadian investors (their clients) together with Canadian (also their clients), without the need for the Goldman Sachs’s?.

The banks’ complete silence on this matter of considerable enormity (a loss of $35 billion in Canadians’ life savings) has brought disrepute to the Canadian financial system and the faith we perhaps naively place in these people and their institutions. This is wholly unacceptable. They have taken sides on this matter by their profound and conspicuous silence. That is shameful to the extreme. Some like TD have totally crossed the moral divide by saying that they prefer the “certainty” that Flaherty’s new tax has brought to the market. Don’t kid yourself, if they liked certainty, they would have loved the certainty that Harper’s promise brought. What they’re saying is that they love the policy. I’ll let you figure out why. The “league table” below might help explain their totally self serving agenda.

Before condemning Bay Street completely, it needs to be made absolutely clear that there are a handful of analysts who have not been shy about the outright falsehoods of this government and the consequences that these falsehoods will bring to the financial security and economic sovereignty of our country. But then, none of them goes by the name of Nixon, Clark ,McCaughey, Waugh, or Downe, do they? Think of these latter individuals as Slaughterhouse Five. Where banking can be friendly. The clientele merely lambs.

Apparently, I am not alone in these views. Here is what Seymour Schulich had to say yesterday on BNN:

“No disrespect to Bay Street, who made billions of dollars selling these things and put them in all their clients’ accounts,. And abandoned everybody. No disrespect to those people. There are two and a half million people who own these things” He then went on to say how the Conservatives are throwing away the upcoming election because of this issue.

Lets examine Seymour Schulich’s statement about Bay Street:

(1) 2.5 million Canadians who own these things? Correct
(2) Abandoned them? Any one hear a pin drop yet?
(3) Made billions? Here are the underwriting fees from income trust new issuance for the last 10 years ending Halloween 2006. This excludes secondary trading commissions which would be equally immense:

CIBC $1,332,250,000
RBC $948,200,000
Scotia $749,900,000
BMO $526,900,000
TD $349,500,000
National $200,600,000

Total $4,107,350,000

Unlike Seymour Schulich, I do have considerable disrespect for these people in charge.. It’s time that the financial leadership of this country show some leadership and moral back bone. It is incumbent on them to act and not to cower in silence. That is unacceptable. If they keep up this of Silence of the Lambs routine we’ll know them for who they truly are. Ruthless, voiceless, apologists as they tacitly endorse the policies of Boutique Jim Flaherty to the detriment of all Canadians who previously had faith in their major institutions. I am sorry to report. There aren’t sides to be taken when it comes to the truth. The truth in this instance is a discernable fact. !8 pages of blacked out documents is not my version of the truth. Question: Why have you allowed it to become yours? Bad endings, by definition, start with bad beginnings. Don’t say you weren’t warned.