Former Goldman Banker To Head CMHC: "Canada's Mortgage Monster"

Tyler Durden's picture

Back in 2011 and 2012 we profiled the one organization that was among the key support pillars not only under Canada's housing market (and according to many, bubble), but also the entity that by providing tens of billions in cash and loan support to Canada's banks, served to rescue the financial sector from rather unpleasant consequences: the Canadian mortgage insurer Canada Mortgage & Housing Corporation (CMHC) also known as "Canada's Mortgage Monster."

Recall from a 2012 report by the Canadian Center for Policy Alternatives:

The official story of the 2008 financial crisis goes like this: American and international banks got caught placing bad bets on U.S. mortgages and had to be bailed out. But not in Canada. Through the financial crisis, Canadian banks were touted by the federal government and the banks themselves as being much more stable than other countries’ big banks. Canadian banks, we were assured, needed no such bailout.


However, in contrast to the official story Canada’s banks received $114 billion in cash and loan support between September 2008 and August 2010. They were double-dipping in not only two but three separate support programs, one of them American. They continued receiving this support for a protracted period while at the same time reaping considerable profits and providing raises to their CEOs, who were already among Canada’s highest paid. In fact, several banks drew government support whose value exceeded the bank’s actual value. Canadian banks were in hot water during the crisis and the Canadian government has remained resolutely secretive about the details.


It should be noted that the “Extraordinary Financing Framework” was prepared to spend up to $200 billion to aid the banks and other industries. In other words, while the sums reported in this report  are enormous, there were even more funds to be disbursed if the banks needed them.


It was the collapse of Lehman Brothers that started the massive support for Canadian banks from both American and Canadian governments, as shown in Figure 1. Massive loans from the liquidity programs of the U.S. Federal Reserve and the Bank of Canada provided the bulk of the initial support for the big Canadian banks.


However, it was the third support from CMHC’s Insured Mortgage Purchase Program (IMPP) that did the heaviest lifting. In contrast to the loans of the first two programs, CMHC was providing direct cash infusions to Canada’s banks, although it took longer to ramp up. The program provided its first cash to the banks in October 2008.


Within four  months’ time, Canada’s big banks requested and received a whopping $50 billion in cash in exchange for mortgage-backed securities. By March 2009, government supports to Canada’s banks peaked at $114 billion. At this point, support for Canadian banks was equivalent to 7% of Canada’s 2009 GDP. That support represents a subsidy worth about $3,400 for every man, woman and child in Canada.


But while the full impact of CMHC on the Canadian housing and banking sector remains debatable, one thing can be said: next to the Bank of Canada, it is perhaps the most critical entity in preserving the nation's financial stability.

And with a key player responsible for the perpetuation of the status quo having departed Canada recently, namely Goldman's Mark Carney leaving the BOC and heading to the Bank of England, some were wondering just who would supervise thing up north if and when things turned sour.

Those questions were answered on Friday, when Canada named the next chief executive officer of the government-owned housing agency. His name is Evan Siddall, and, what we assume will came as a surprise to nobody, he was formerly a banker at, drumroll, Goldman Sachs.

From the WSJ:

Canada has tapped a veteran investment banker and special adviser to Canada's central bank as the new chief executive of Canada Mortgage and Housing Corp., the government-owned mortgage insurer that Finance Minister Jim Flaherty recently said has become something "more grand" than originally intended.


Evan Siddall was named head of the agency for a five-year term. CMHC has been without a corporate leader since May. His arrival comes at the Conservative government has introduced a number of measures to bring more onerous oversight over the mortgage insurer, amid mounting concerns about overheating in segments of Canada's housing market.


"Mr. Siddall brings to the position extensive leadership and senior management experience," Canadian Employment Minister Jason Kenney said in a statement. "His proven financial and capital markets expertise will be of tremendous value to CMHC."


In the same statement, Mr. Siddall said he looked forward to ensure Canadians "continue to benefit from CMHC's key role in providing affordable and accessible housing, as well as in promoting a strong financial system."


* * *


Mr. Siddall was most recently a special adviser to the Bank of Canada Governor, appointed in December 2011, by Mark Carney, who has since left to run the Bank of England. Both Mr. Carney and Mr. Siddall once worked at Goldman Sachs Group Inc.


"Evan is a calm, understated professional hand and has a terrific understanding of financial markets, and where risks wherein them lay. It is an inspired appointment," said Finn Poschmann, vice-president of research at the C.D. Howe Institute think-tank, which has written extensively about CMHC and its role in the financial system.

Why the CMHC?

CMHC is the dominant mortgage insurer in a market that differs from its peers. Mortgage insurance is required of anyone buying a home with less than a 20% down payment. That insurance comes with 100% backing from the Canadian government, which means taxpayers, not lenders, are on the hook in the case of defaults.

Goldman will make sure of just that. And just like that, the tentacular status quo protection team has been reassembled in Canada, and no matter how bad things get for everyone else, the global banking syndicate will be sure to profit even more at the expense of taxpayers in one more country. After all, that is what Goldman's true function in the world: to take financial crises and make them into opportunities... for some.

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curbyourrisk's picture

Fuck the Squid.    Fuck the TBTF

Jumbotron's picture

Well of COURSE he's going to head it up.  Sharks smell blood in the water from far away too.  Also, I heard bears shit in the woods....but that may be an internet rumor......just not sure.

Buckaroo Banzai's picture

Go to downtown Toronto, all you see is cranes.

aVileRat's picture

Yeah, most of those are being financed by hot Asian money. CHMC dialed in someone to wind down their book since the Federal Gov. found out Beaver Bonds were being used in CMBO products. Kind of not what the CHMC was designed to do. 

Ex-Personal debt in Quebec and Toronto, Canada still has very little headline numbers of concern. IMF report had excellent points, the MC'B cleanup will be benign compared to what the interest rate inflation kickup will do to the 49% in the British and US FIRE economy.

Australia is it's own kettle of fish. IMF gave them a similar report two years ago and their gov. response was to trial a resource extraction tax. Didn't deflate their housing bubble, killed about 400 bp on their headline GDP.



caShOnlY's picture

Canada still has very little headline numbers of concern. IMF report had excellent points, the MC'B cleanup will be benign compared to what the interest rate inflation kickup will do to the 49% in the British and US FIRE economy.

Let me ask you this:  When the the US FIRE economy finally shits the bed, how will those Canadian numbers look when it's number 1 export market only buys 20% of what it used too?

Let's stop looking at bullshit numbers and look at reality:  Wether Asian hot money or stripper tips are building those condos in Toronto, who the fuck will paying on a multi-million dollar mortgage when the NAFTA bux dry up?  The Canadian economy can best be described as "parasitic" and that means "whatever the host experiences so must the parasite".   Anyone see a credit bubble in Canada? no?

Canadian Dirtlump's picture

I sold my house more than a year ago and put off buying one knowing it may cause me a divorce. Turns out I was right, but after the meltdown I'll at least have something to show for it.

debtor of last resort's picture

Smile, you're on Zerohedge!

Kirk2NCC1701's picture

It. Is Not. A. Goldman/Zionist.  Conspiracy.  We are not planning to take over the world via its banks.

Honest.  It is merely a series of coincidences, no matter how improbable they might seem.

-Love, PR Dept of Goldman Sax

jal's picture

In canada you cannot hand in your keys and walk away.

debtandtaxes's picture


In Canada if we go "underwater" we wait until the value goes back up. People only default if they can no longer pay their mortgage payments.

Colonel Klink's picture

Another testicle....errr....tenticle of the squid.

JohnFrodo's picture

How long before its sold to Goldman Sachs at a discount

Dr Benway's picture

Beautiful. Canada and Australia are usually trotted out as examples of countries where housing miraculously evaded the GFC, with no one needing bailouts due to "stable banking".

In reality there was a plethora of explicit, implicit and secret subsidies that served to ensure there was not even a slight correction to the housing bubble, leaving the situation much worse rather than better.

CPL's picture

It's all so scandalous once it does pop again, Canada sold pretty dearly in the 90's for it's 'recovery'.  Primary reason the conservatives were destroyed in the elections for a decade, then burned down to eight guys in a pub.   And somehow came back under mysterious circumstances after somehow co-opting the reform party...that didn't seem to reform much except the Sun scandal section.

Then they turned back into the Conservative party.

Lore's picture

I have to admit that this completely takes the wind out of my sails.  I scanned a lot of Canadian sites when subprime entered the vernacular, and I don't believe there was one writer who addressed this.  It's settled, then:  Canada, like America, is well and truly screwed, and our middle class, like yours, is just another teat to be milked.  Merry Christmas. Wonder if our reckoning will come next year.  God help us.  Canadian consumer debt to hit record $28,853 in 2014: TransUnion forecast

Kirk2NCC1701's picture

Q for Canada's External Affairs:  Since Canada was sooo, tres, tres progressive in being the first nation to force the closing of Iranian Embassy in the last 10 years, are they now going to be equally 'progressive' in the re-normalization of relations with Iran? 

Or will it now prove, what everyone else suspects and privately snicker at:  That Canada is another puppy-state of the global-imperialist Zionists (with HQ in London, Tel Aviv and NY)?  Bark twice for Yes, Growl for No.

Canadian Dirtlump's picture

Harper has taken the idea of being a hand maiden to a certain occupied area to a new level.

GoldSilverWolf's picture

Woof woof.

That's the sound of Harper pandering to these external interests.

GoinFawr's picture


Just another nail for the coffin of Canadian sovereignty; what a bunch of ignorant hosers.

youngman's picture

And boy do they have a housing bubble....and it will blow at some point....but so far the commodities are keeping them afloat..

GoinFawr's picture

Not really, because they've been suckered so deeply into the Mankiw school of soakanomics Canukistan effectively sells most of its nonrenewables below cost (to the municipal/provincial/national balance sheets anyway); so really the quicker Bob and Doug get the stuff out of the ground the deeper into debt peonage their nation goes...

Eg. Canadian royalty rates are the laughingstock of the oil producing nations, and they agreed to NAFTA supply quota provisions that even Mexico wouldn't sign up for.

It's a convenient, self-perpetuating debt cycle arrangement for Canada's foreign creditors and their oil companies; the true owners of Canada.

Lore's picture

That is my observation as well. In some respects at least, our much-ballyhooed "Trade Agreements" are essentially KY Jelly.

SweetDoug's picture





And anyone wonders why a crappy little detached bungalow of about 1200 with a basement, went from $280K to $420 in 3 years @ Jane and Wilson?

And the nice custom built on 1/2 with a basement apartment, going for $585K, had 6 people come by and no offers this summer.

The market has run out of steam.


That and their triple counting the sales…






Lore's picture

Re: "triple counting the sales..."

I know real estate salespeople who share war stories about the audacity among some in their industry.  "Dog eat dog" is putting it mildly.

Herdee's picture

My suspicion is that the Canadian Government is taking the IMF study of CMHC seriously and will unwind it over the recommended ten year period.This is the man to oversee the first half of the program in order to get rid of it.Now,what will morf out of it is a different story.

eddiebe's picture

Great another wolf among the sheep. This should work out really well for ya.

El Tuco's picture

Ontario, Canada has become a corpse. Manufacturing has been slaughtered. Plant closures are common place. Provincial Government (Liberals) have squandered approx 4 billion dollars. They have basically taken projects and taken tax dollars for these projects and rewarded their friends. The separation of wealth from the masses continues. Food inflation is out of control. People are in debt more today than anytime in the past. Homes in Toronto average around 500 K for a tear down. You can live in it but it will require a complete gutting and reno. Condo's are the norm. Get your 700 sq/ft for 400k -800k + 600-1200 a month in maintenance fees. Want to rent something? Good luck, you'll pay 800-1200 bucks for a cockroach infested basement apartment.

The Government is now the largest employer. They have given themselves raises at the expense of the tax payer and private industry. Just look at a company like Ontario Power Generation and how many of it's employees are making over 100k a year. There are security guards there ,making over 120k a year. 12 % of the employees at OPG have family working there. There are thousands of employees making over 100 k a year. The tax payer is paying for it. Every dollar they invest in their pension the tax payer invests 4 more for them. It is fucking insane at the theft that is occurring at just the Provincial level. Toronto's Mayor Rob Ford may not be a model politician but all that means is he is not a thief. He is trying to save every penny he can for a bankrupt welfare 3rd world city called Toronto. All he gets is ridiculed by the far left. They spend tax payers money on 3rd world immigrants, putting them up in waterfront condos and giving them approximately 2000 + a month to live. Some of these immigrants are relatives of warlords in Somalia, etc. Fucking sick....

Canada is a fucking mess. Bankrupt, over taxed, under serviced and the people are so fucking beat up and tired they can't raise a finger to fight back. The tax payer is being killed by they government and the Oligarchy. Eventuality the host will die and then what?


Almost everyone I know there (Toronto) is trying to escape. All are looking for work or a way to move to the USA. As bad as it may seem in the USA, the level of theft in Canada makes the Guberment in America look like amateurs.

Socialism Bitchez....Socialism....Everyone works for the rich/guberment....

debtandtaxes's picture

With the greatest of respect, sir; I live in Toronto and own a (small) house and I refuse to even visit the USA because of its lack of habeous corpus near their border and my refusal to give any money to US government or corporations (where possible).

What the world needs to know is that WE CANNOT WALK AWAY FROM OUR MORTGAGES!!! After forclosure and sale of a property, we still have to pay any balance of an outstanding. Consequently, even if Canadians go "underwater" we don't default and walk away. We just wait for the prices to rise again before selling. Duhhhhhhhhh.

And if you think Ontario is socialist - try living in Quebec for a few years.....

asteroids's picture

When the housing crash comes to Canada the CMHC, by agreement, gets bailed out by the government. The loonie will get crushed when this happens. The government here has put on the breaks and limited exposure to CMHC less the loonie fall to zero. I wonder what this squid retred is going to try to get the government to change its mind.

q99x2's picture

Dudes nostrils got curled up from havin to smell himself for so many years.

Radical Marijuana's picture

One of the most awesome displays of the ability of the Canadian mass media to maintain their LYING BY OMISSION strategy was the way that they "reported" on the Canadian government's sudden jump in budgetary debt after the 2008 financial crises. Apart from a few tiny stories in the back pages of some of the financial press, the Canadian mass media deliberately ignored the over $100 billion which this article above mentioned!

‘Not a bailout’:

the great Canadian bank caper

By Ralph Surette, June 19, 2010.

"You know how wonderful Canadian banks are. They didn’t fail when others did, and didn’t need to be bailed out. We are standing tall among nations in that regard, and the Harper government can stick out its chest and preach the Canadian model of prudence and caution to a profligate world. Even the Americans are agog at our fiscal virtue. ... Does this sound too cute? Here’s the inevitable other side of the story. The banks were actually 'bailed out' to the tune of $125 billion just before and after the 2008 election — in the form of a massive purchase of questionable mortgages and other "rotten paper," in the words of one economist, held by them. This was done through the Canada Mortgage and Housing Corporation, a federal agency. The taxpayer is now on the hook for these mortgages, 40 per cent of which are considered at risk, with more to come if interest rates rise and the economy dips again. But the kicker is this: Hardly anybody noticed. It wasn’t an issue in the election, and the financial press said nothing. ..."

Glance at the chart there, to see how the Federal government debt in Canada changed, before and after 2008.


When a financial bubble popped for much of the rest of the world, Canadians were mostly able to ignore that, and were able to continue to go on borrowing even more money.

CBC News, December 16, 2013.

"New data released Monday from the organization that represents home sellers shows Canada's housing market continues to hit new highs, with the average price increasing by almost 10 per cent in the last 12 months to about $400,000."

Household debt in Canada hits all-time high

By Julian Beltrame, December 13, 2013.

"... The increase means Canadians owe nearly $1.64 for every $1 in disposable income they earn in a year. ... Policymakers are fixated on the debt ratio in part because it was at above 160 per cent that households in the United States and Britain ran into trouble about five years ago, contributing to defaults and the financial crisis that triggered the 2008-09 recession."

Most of the financial experts that I tend to respect predict that that Canadian bubbles still can continue for another year or two ... The average Canadian does not have the slightest clue to be able to understand what has happened to places like Greece or Cyprus. It is quite surreal to be watching Canada continue to blow bigger bubbles, while most Canadians continue to think the same pre-bubble-popping ways that those in the USA and UK used to think back in 2007.

Canada is a relatively unique place in many ways, such as it has a publicly owned central bank, but has agreed to never use it since 1974. Instead, since then, Canada has been told what to do by the BIS, under the international banksters' systems. Canada is kind of cruising on autopilot, in the same basic colonial way that it has since it started. Canada still has a relatively small population, compared to its abundance of natural resources. When one looks at almost every factor, both today, and in foreseeable possible futures, Canada is better off than almost anywhere else, as demonstrated by Canadians still being able to operate inside of a bubble of debts that is constantly being blown bigger, with a common popular psychotic psychology due to their awesome level of collective deliberate ignorance, which has been so successfully managed and assuaged through the lying by omission of the Canadian mass media. As hard as it may be to believe, Canadian mass media are even more able to successfully lie by omission than American mass media. The flip side of Canadians being relatively comfortable, and relatively better off than the people in almost every other country, is that the average Canadian is more abysmally ignorant, and happier to stay that way, than the people in almost any other country.

Of course, that is why predictions are like those of a useless Cassandra, since Canadians are living inside protected bubbles, which are constantly being blown bigger and bigger, while simultaneously, the psychology of Canadians is quite comfortable to remain within their bubbles of perception too. It is practically impossible for ordinary Canadians to even consider that what banksters like Goldman Sachs did to Greece, et alia, will eventually also be done to Canada too. 

Lore's picture

Good post. Re: "the psychology of Canadians is quite comfortable to remain within their bubbles of perception too..."

I agree.  Canadian media is a disaster of ignorance, myth reinforcement and exploitation. "Agenda 21" warrants particular contempt. Canada's realpolitik is increasingly shaped and subsumed by NWO propaganda, especially at the local level.  Sensible, critical discourse on major issues of public policy is rare: there is only repetition of slogans and sound bites to eliminate opposition, punish prosperity and rationalize greater CONTROL. Seeking purpose, the weakest members in a community absorb the BS like sponges and morph into "green" crusaders,  ready for deployment by rising puppet "grassroots" totalitarians. It's ugly and won't end well. Nothing's more dangerous in hard times than the madness of crowds.  The most dangerous cities will be those dominated by "Agenda 21" policy, as it creates the greatest market imbalances.  Today's "densified" canyons of debt-financed shoebox condos will become tomorrow's ghettos.