A task force of Liberal MPs last week accused Canada’s chartered banks of failing rural Canada.
“The banks have a special responsibility for the social and economic well-being of our rural communities,” said the report released Nov. 4 after almost a year of hearings and study. “They are not measuring up to that responsibility.”
The Liberals recommended the government pass rules to encourage more rural competition for financial services. It suggested banks be required to give notice and talk to the local community before being allowed to close a rural branch.
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While urging the federal government to disallow proposed bank mergers, the Liberals asked the government to change legislation and rules to allow the credit union movement to create a stronger national system.
The task force report, A Balance of Interest, was released Nov. 5 after close to a year of work and about 40 public meetings across Canada. It was highly critical of banks.
It has been sent to finance minister Paul Martin, who must ultimately decide on the fate of proposals to merge the Bank of Montreal with the Royal Bank of Canada and the Toronto-Dominion Bank with the Canadian Imperial Bank of Commerce.
A final decision is not expected until later next year, after the House of Commons finance committee has offered an opinion and several other studies have been completed.
Caucus task force chair and Toronto MP Tony Ianno said the big banks never justified their request for approval to merge and kept changing the reasons for the proposal as earlier justifications were challenged.
“Banking is not a right, it’s a privilege,” he told reporters.
“We represent the people of Canada and we will dictate how this country is governed, not the bank chairmen.”
In a chapter on rural issues, the Liberals said banks have been closing down branches with little regard for the impact on small communities and farmers.
It is happening already and proposed big bank mergers would make it worse.
“The deterioration in financial services in rural areas has important implications for the agricultural sector, which holds a special place in our national economy,” said the report. “The sector deserves to be treated on a fair and equitable basis with urban Canada when it comes to access to credit and capital.”
The Liberal MPs recommended that the government encourage the banks to provide more rural services and that it “take the necessary steps to facilitate more effective operation of credit unions and foreign banks in rural areas.”
Their report suggested Ottawa consider allowing Canada Post to offer financial services in rural communities where post offices still exist.
However, some of the report’s strongest recommendations on rural services came when it suggested federal credit union legislation be amended to give the credit union system what it has been asking for – more bank-like powers to operate a credit union system across the country, offering more services and more convenience.
The Liberals sounded like credit union evangelists.
“We commend the credit unions for their efforts in rural Canada and encourage them to continue this work,” said the report signed by close to 40 percent of the governing caucus, 55 MPs from urban and rural ridings across the country.
“We urge rural Canadians in all parts of the country to support local credit unions.”
