Canadian banks avoided the worst of the global financial crisis due to successful public policy and good management, said Rob Wessel, Managing Partner of Hamilton Capital in Toronto, in an article written for the Globe and Mail.
“For much of the past century, our policy makers have successfully – and deliberately – created a very powerful, domestically controlled banking system,” he says.
But, Wessel argues banks’ market dominance and growing power comes at a price, with even Citigroup founder Sandy Weill saying it’s about time megabanks were broken up.
In an essay entitled Are Canadian Banks Becoming Too Powerful?, Wessel agrees. He proposes adopting three policies that will bring banks down from their pedestals and shift focus to the consumer.
In his essay, he says the shift is crucial because, “While the current system is excellent, the ongoing concentration of power is not [fair] to either consumers or businesses. Banks enjoy de facto protection against foreign acquisitions and wide swaths of the wealth management and investment banking sectors have also become protected, creating what is now effectively a closed market.”
Weill, in his statement, said large financial institutions to be split up due to the risky pairing of consumer banking institutions and major investment units.