ABCP panel seeks
BOYD ERMAN and JACQUIE MCNISH AND TARA PERKINS
December 10, 2008 at 6:00 PM EST
The committee overseeing the $32-billion asset-backed commercial paper
restructuring is meeting with the Finance Department Wednesday to plead
for government assistance amid signs that the proposal to fix the frozen
notes is in jeopardy.
A resolution to the 16-month old problem now appears unlikely before
2009 because some players in the restructuring are dragging their feet,
and participants are growing increasingly concerned that the endless
delays may lead to failure without government support.
The restructuring committee, led by lawyer Purdy Crawford, is meeting
Wednesday with federal officials in Toronto, sources said. The hope is
that the federal government, and potentially provincial governments that
also have a stake in the success of the restructuring, will somehow
provide backstops that will get the process moving again.
Sources said the issue continues to be the fact that many institutions
that are crucial players in the restructuring have put the plan low on
their to-do lists as they grapple with other issues thrown up by the
Although the plan was approved by dozens of banks, pension funds and
other players months ago, sources close to the discussions said support
for the rescue operation has declined following takeovers or government
bailouts of many of the institutions involved.
“Clearly the issue is less significant to a lot of our stakeholders and
less of a priority to stakeholders because of everything that has
happened,” said one person familiar with the talks.
Until now, the federal government has taken mostly an observer role,
intervening only to prod institutions to participate in the
Finance Minister Jim Flaherty said in August that he was concerned about
delays in the restructuring of the $32-billion market, but added that he
thought Canada had shown the way to the rest of the world with respect
to how it dealt with the situation, noting the plan did not require
public funds to resolve the issue. Sources said the Wednesday meeting
was not with Mr. Flaherty directly, but with some of his officials.
Finance Department officials have recently signalled that Ottawa is
willing to consider a request from the committee for federal government
support, said people familiar with the talks.
“The Finance Department is much more engaged,” said one person familiar
with the discussions.
One solution would be for governments to put up extra collateral as part
of the deal, which would take some of the risk off the shoulders of more
reluctant participants and encourage them to finally sign on. While
Ottawa would take the lead, some sources suggested that Alberta and
Quebec, which both have major provincially-owned financial institutions
caught up in the ABCP mess, could also make contributions.
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