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Commons finance committee to vote on ABCP hearings


Duncan Mavin

 

Friday, March 28, 2008


TORONTO - The asset-backed commercial-paper workout will become a political issue next week when the House of Commons finance committee votes on whether or not to hold hearings into the crisis.

Committee members will vote on Monday on a motion tabled by Liberal finance critic John McCallum. It is expected there will be broad cross-party support for the proposed hearings, which would take place in the next two weeks.

A ‘yes' vote to the idea of hearings would give hundreds of disgruntled retail investors a chance to have their say in public.

It would also likely mean bankers, brokers and other high-profile Bay Streeters would be called to Ottawa to account for their role in the crisis. The hearings, if they take place, would also likely involve officials from the Bank of Canada and Canada's top banking regulator, the Office of the Superintendent of Financial Institutions.

The notice of motion filed by Mr. McCallum this month says members of Parliament will try to find out "whether federal regulators and other stakeholders could have done a better job in anticipating the crisis and/or reducing its cost," and "what action the federal government, federal regulators and other stakeholders are taking so as to reduce the likelihood of experiencing a similar crisis in the future."

The ABCP crisis began last August when investors - from ordinary folks who had poured their savings into the paper to huge institutions holding many millions of dollars worth of the stuff - found the market had frozen up and they were left holding investments they had thought were safe and that could be rolled over on a short-term basis.

Since then, a committee of bankers, lawyers and accountants has worked on a plan to restructure the investments.

Bay Street lawyer Purdy Crawford, head of the restructuring committee, announced the proposal last week. He begins a cross-Canada tour on Monday, during which he hopes to persuade investors to agree to the proposal in a vote likely to take place in April.

Most of the large institutional investors in ABCP are thought to have backed the plan, which also has the support of Canada's big banks.
 

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