Wednesday, April 23, 2008
The current "credit debacle"
crippling the world's financial
markets was caused by a combination
of "greed run amok," regulatory
failure and a "flawed" rating-agency
system, according to Anthony Fell.
Barely four months into official
retirement, the dean of Canadian
investment bankers spared few during
a recent lecture in which he
delivered a "stinging indictment" of
the financial industry, where he
carved a prestigious career over
"It was greed run amok and it will
take years or perhaps a decade or
longer for the financial industry to
regain its credibility in the minds
of investors and in the community at
large," Mr. Fell told a crowd of Bay
Street money managers, corporate
lawyers and federal government
officials who attended the fourth
annual David Dodge lecture at Humber
College in Toronto.
"When you reflect on it all, it is
indeed a sad commentary," the
68-year-old former chairman of RBC
Capital Markets said in his
customary blunt fashion.
During his lengthy lecture, which,
according to Mr. Fell, was "his
first, and his last," the senior Bay
Street financier talked about the
precedents for the current credit
crisis, which he described as "a
huge embarrassment for the global
On the top of Mr. Fell's list of
culprits are banks and investment
dealers on Wall Street and Bay
Street for not being aware of the
risks of the U.S. housing bubble,
for not understanding them, and for
ultimately failing to "control risk
in their own businesses."
Regulatory failure is another factor
which Mr. Fell said contributed to
the credit crisis, particularly the
Federal Reserve for electing to
"forego" its responsibility to use
its powers to regulate the
residential-mortgage industry in the
Making matters worse, he said, the
central bank kept interest rates too
low for too long.
He blamed rating agencies, which
gave many of the sub-prime
instruments and asset-backed
commercial paper in Canada triple-A
ratings, for failing to protect
"In my view, the rating agencies
have now lost all credibility," Mr.
During his 50 years in capital
markets, Mr. Fell developed a
sterling reputation for integrity,
despite his legendary toughness and
fierce competitiveness. He was
chairman of RBC Capital from 1992 to
December, 2007, and now sits as a
director of Bell Canada, CAE Inc.
and Loblaw Cos. Ltd.
When asked yesterday to elaborate on
his speech, he demurred, saying, "I
think I'll let the comments speak
for themselves. You've got to more
or less tell it like it is, it
happened, it's happening."