ABCP delays 'a
concern,' Flaherty says
August 29, 2008 at 10:00 AM EDT
TORONTO — Federal Finance Minister Jim Flaherty says he's concerned
about delays in the restructuring of the $32-billion market for frozen
Canadian commercial paper.
“Delays are always a concern because the investors, I'm sure, want to
have their assets become liquid again,” he said Friday, noting that the
market for asset-backed commercial paper has been frozen for roughly a
year now. Mr. Flaherty was speaking with reporters at a news conference
following release of the latest growth figures for the Canadian economy
The market for the complex investment securities seized up last August
as potential exposure to U.S. subprime mortgages spooked investors,
contributing to a lack of demand.
A committee, headed by Toronto lawyer Purdy Crawford, has since been
working on a plan to restructure the market. But the plan has been held
up by court challenges, and some companies that hold the frozen paper
say they will now ask the Supreme Court to re-examine the plan.
The companies are fighting it because it removes their right to sue
banks, rating agencies, and other players in the commercial paper
While the plan is held up, investors are left with the frozen paper and
no access to their money.
But Mr. Flaherty said he believes Canada has shown the way to the rest
of the world with respect to how it dealt with the situation.
He said Mr. Crawford has done a great service for the country by leading
the way on a plan that did not require public funds to resolve the
“Some of the participants, quite rightly, are exercising their legal
rights to challenge what is being proposed, and the courts will make the
final determination on that,” Mr. Flaherty said.
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