Oh Canada?

Give me a minute to land the plane...

For those of you who know me, I was educated in and lived in Canada for high school and university. I have my opinions of Canada but I enjoy the people and spend every summer there. It is a wonderful country, and I do love myself some Labatt’s Blue or Kokanee for those of you from Vancouver, if I may say so.

Still, why am I weaving Canada into our disaster conversation? I will get there in a minute.

Canada’s banking system is one of the world’s safest, and there are 5 big banks up there. My wife actually worked at one of them as one of her first jobs out of university. I did not. I missed out on an internship between my sophomore and junior year.

The largest of the banks is the Royal Bank of Canada (the Royal). There is also the Bank of Montreal (BMO). The upstart is the Toronto Dominion Bank, (TD). There are also the Bank of Nova Scotia (Scotiabank) and the Canadian Imperial Bank of Commerce (CIBC). These five banks are the primary placement of Canadian deposits and lending, and the first three have significant business and presence here in the US, with those subsidiaries subject to US banking regulation, the same as US banks are.

TD is primarily on the US East Cost. The Royal had a presence in the South East but pulled out only to re-engage in California by buying LA’s own City National Bank. Lastly, BMO focused its attention in the Chicago market, but like the Royal, and saw greener pastures in California, buying what used to be Bank of the West from PNB Paribas.

Why is all this important? I think there are some who can see what I am thinking. But, being thickheaded, it took me a minute to put it together myself.

Last week at Milken, I was sitting next to the Consular General of Australia. She discussed the Australian experience with wild fire. She also mentioned the three letters which get any economic development person’s juices flowing, “FDI.” FDI is Foreign Direct Investment. That means, a foreign country puts money into your own. It is the mother’s milk for economic development professionals. They love FDI. It is also good diplomacy.

So, I let that moment wash over me. I made a crack about having lived in a Commonwealth country as well (Canada and Australia are former British Colonies which then became the Commonwealth). I went on my merry way postulating about CRA. However, the three letters sat in the back of my brain. FDI. Sometimes it takes a couple days to put the plan together.

As I was writing the customary e-mail thanking her for taking the time to talk to little old me, I started to explain where FDI could be useful. Infrastructure made me think. Australia also has a very large bank, Macquarie Group, who does a lot of infrastructure projects. Maybe there could be some synergies? Who knows? But, they did not have CRA. I care about CRA remember. I need to solve that problem, get someone to take the lead. Foreign banks without a presence in the US market and deep footprints meant CRA will be limited as a tool.

I was also thinking and writing about how WE NEEDED A DAMN BANK TO JUST GET THIS THING OFF THE GROUND. If we can just present the package to the electeds, they will likely be so relieved to not have to do it themselves.

How could we motivate them? Goodwill? Sure, but is that enough to justify the newness of it? Bankers are not known for their risk taking, contrary to the commercials. They need something more. There needed to be something greater. But I needed another hook.

Then it hit me. What if I go way outside the box?

What about those familiar BMO signs I began to see the end of last year? At first, I thought I woke up and was in a major Canadian city, but I was also going through Downtown LA when I saw the familiar signs so there was something weird happening. BMO, yes. But, what about City National Bank? They were part of the Royal. What about TD? They are not in LA per se, but they are still a major presence in the US and we know CRA can come from anywhere. What about the fact they all have to comply with CRA? BMO made huge promises ($40 billion invested in underserved communities, a familiar number these days) when they bought Bank of the West. CRA could do what FDI could not, it is mandatory and good diplomacy, and it keeps the investments in the US instead of putting the investment in foreign hands. Hmm…this is different.

So, then I got to the punchline- what if Canada’s banks could underwrite the rebuild of one of the larger ex-patriot Canadian populations in the world, larger than some provinces? To further underline the point of the interconnect between the countries, the Tragically Hip (Hip), an iconic Canadian band, releases their live show at the Roxy, IN LOS ANGELES from 1991. The Hip is Canada’s band for a generation, and they are using an LA show as a major album release after their singer passed away from cancer.

What if Canada’s banks, the good neighbour that they are (the spelling was purposeful) to the north, and its American subsidiaries were the lead on bringing the CRA money to LA? They have to do it anyway to comply with CRA, so why not take the double win?

Well, I just had to chuckle about the irony of it all. The Canadian banks could do it. They could have a lot of reasons to do it. The new Prime Minister is a banker, a Central Banker of both Canada and the UK (the first non-UK person to be the head of Chancellor of the Exchequer, or the head British banker), not to mention a former principal at Brookfield (which you might remember from earlier posts) If anyone could see the opportunity, it would be him.

What better way to help your neighbour (I did it again), to help a city rebuild, a county to rebuild, a state to rebuild? We need it. Why not Canada? They send us their water bombers. Why not its banks helping us do what we need to do and they need to do anyhow?

No FDI, just straight CRA. BMO committed to $40 billion. If they do it, maybe I can get that internship I missed out on back in university at the BMO.

Is there a Mountie on the way? Perhaps eh?

Oh Canada indeed.