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
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
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
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.