An interesting little side story to the AIG debacle – how AIG introduced Canadians to sub-prime mortgages. I especially love the quote from AIG’s top executive in Canada: “In terms of exposure to the government, the practical likelihood of AIG, an organization with $800-billion in assets, ever coming to the government for anything as it relates to a claim is not nil, but it is as close to nil as it possibly could be.”
How high-risk mortgages crept north – Globe and Mail – Jacquie McNish and Greg McArthur – 02 April 09
The untold story of how elements of the first Conservative budget in 2006 encouraged the entry into Canada of such big U.S. players as AIG, creating our version of subprime mortgages
In the first half of this year, as the subprime mortgage crisis was exploding in the United States, a contagion of U.S.-style lending practices quietly crossed the border and infected Canada’s previously prudent mortgage regime.
New mortgage borrowers signed up for an estimated $56-billion of risky 40-year mortgages, more than half of the total new mortgages approved by banks, trust companies and other lenders during that time, according to banking and insurance sources. Those sources estimated that 10 per cent of the mortgages, worth about $10-billion, were taken out with no money down…
The story of how the U.S. housing crisis spread to Canada is a tale of carefully orchestrated U.S. corporate lobbying, failed public-policy promises and government inaction to numerous private and public warnings about reckless mortgage practices…
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