As the new Minister of Finance, Carole James, has several issues on her plate. The two simplest are getting attention, because they are listed in the direction given to her by the new premier. One is taxation, reversing the scheduled increase that faces large credit unions that no longer qualify as ‘small business’. And second, to remove the onerous capital penalty on commercial lending that exceeds 30% of all assets.
But several other issues await. Perhaps the biggest is not the most obvious. The application for Coast Capital Savings to be permitted to go federal is before the Financial Institutions Commission and they have deferred their decision. I can only speculate that the deferral was partly to allow the new minister to provide comment or direction. The public policy on this front is not clear. The commission was left without much of a framework.
The commission allowed that the impact on the BC credit union system would be considered as a criteria when assessing the application. And yes, this is the big question. This is also the question that the minister must address. Coast represents @ 20% of BC credit union assets and members. That departure alone is significant. But there is a very great likelihood that other large credit unions may bolt if the terms are found to be ‘attractive’. And secondarily, new federal credit unions may yet have a more aggressive mergers and acquisitions strategy that may subsequently make BC credit unions targets. I will write another post on this in the coming weeks.
The minister must also confirm the appointment of a new Superintendent. That position has been filled on an interim basis for almost a year.
And the minister will have to decide how to proceed with a review of the financial service sector legislation, now dragging into a third year. Will the minister advance the conventional ‘more regulation’ approach that has dominated political discourse since 2008, or choose to take a ‘smart regulation’ approach such as proposed by Mervyn King. BC has built the second largest co-operative financial services sector in Canada (after Quebec), proving that the federal banking oligopoly can be challenged. Consumers and small business have benefited – particularly in non-urban regions of BC.
W.A.C. Bennett envisioned a BC based bank decades ago. Quietly, the BC credit unions have grown to be such a regional entity.
The minister has many important decisions.