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Harper’s yes to risky mortgages: Globe’s ‘untold story’ was told here

On Saturday, the Globe and Mail claimed to reveal an “untold story” that we covered in The Tyee two months ago – that the Harper government is trying to claim credit for tightening up mortgage standards when it was responsible for loosening them in the first place.

As The Tyee documented in our October 8 article smack in the middle of the Federal election, the Conservatives' first budget in 2006 flung the door open to risky no down payment, 40 year mortgages. Finance Minister Jim Flaherty doubled the amount of public money available to backstop private competitors to CMHC, claiming he wanted to give Canadian consumers more choice.

Last Saturday, The Globe’s front page banner headline read: “Special investigation: How high-risk mortgages crept north”, with a sub-headline promising “The untold story of how elements of the first Conservative budget in 2006 encouraged big U.S. players such as AIG to make a push into Canada, creating our version of subprime mortgages.”

Seeing that, we punched “Harper + financial deregulation” into Google and The Tyee’s October 8 story, republished by various outlets, appeared first and then seven more times within the top ten entries in a total of 34,000. Ah well…

The Globe´s investigation was in depth and did turn up new information, reporting intense lobbying by American insurance corporations that probably pushed Canada's policy shift. Its interviews with U.S. insurance executives reveal they were astonished at how fast Canadians plunged into risky mortgages once they were made available. And the former CEO of US-based Triad Guarantee Inc. is quoted as saying our government failed to regulate to mitigate the risks involved – a telling comment given the Harper government's claims that they acted more responsibly than the Bush administration.

Thousands of Canadians who were enticed to buy homes with the “innovative” mortgages introduced under the Harper government will end up in foreclosure. This catastrophe provides some valuable public policy lessons. Don't try to expand home ownership by encouraging the financially insecure to take on more debt; don't allow the vested interests of one sector to jeopardize your whole economy; and don't run your government on high octane ideology about private sector competition being the answer to every public policy question.

Financial researcher, consultant and writer Ellen Gould wrote the Tyee’s Oct. 8 story on Harper’s policy change welcoming high-risk mortgages and U.S. financial players.

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