Canadian asset performance - a relative story
It remains to be seen whether the reform fever that is presently sweeping through the US securitization market will continue unabated across the 49th parallel but there is no question that these monumental reforms have given rise to a considerable amount of discussion and debate over the appropriateness of similar reforms in Canada. This was perhaps inevitable given the degree of economic integration between the two countries and the fact that both have recently suffered through significant ABS-induced crises (albeit on entirely different scales).
Although these crises may have shared some of the same root causes, the US proposals for reform appear to have been heavily influenced by the US subprime mortgage meltdown and appear to be intended to address the lack of regulatory oversight that permitted the now much-maligned underwriting and product origination and distribution practices in the US subprime mortgage market that arose amid this regulatory vacuum; practices that were not prevalent (if even evident) in Canada. While a more extensive summation of these practices and the US reform proposals can be found in previous postings by Mike Rumball, given the insular nature of these problems, it is important to assess the Canadian market on its own merits in determining the scope and form of future Canadian reforms. We hope, in particular, that Canadian regulators will carefully consider the strong historical performance of Canadian financial assets in the course of determining the necessity, scope and nature of structural reform.
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