When the next big financial crisis hits the world economy, and Canadian banks are in distress -- as they were during the 2008 financial crisis -- the bank-using public will have plenty to worry about.
As we saw earlier in this series, it’s hard to trust banks to protect our savings and investments when so many of them have been exposed behaving unethically, gambling extravagantly on exotic financial instruments, and even engaging in fraudulent activities.
Last week, U.S. regulators adopted the new Volcker rule, which bars American banks from several forms of conflict of interest, including trading securities for their own account, or owning hedge or private-equity funds.
Meanwhile, governments themselves are the source of an altogether new threat to our bank accounts that Canadians should watch very carefully. Many, including the Harper Conservatives, are eyeing a new mechanism for rescuing banks whose rash behaviour gets them in trouble. It’s called the “bail in.”
