January 19, 2009
U.S.-based mortgage insurance companies are pressing the federal government to fully guarantee their home insurance policies in the pending federal budget to expand their market and possibly help resuscitate Canada's struggling real-estate market.
According to people familiar with the lobbying campaign, two leading mortgage insurers, Genworth Financial and American International Group, are fighting to raise existing government guarantees of private mortgage insurance to 100 per cent from the 90-per-cent level that has been in existence since the late 1980s.
Such a move would make the federal government ultimately liable for all of the hundreds of billions of dollars in insured mortgage debt.
Reading this story this morning in the Globe and Mail almost made Peacenik's head explode. Peacenik can barely type. What is missing from this story? How about some background about how the U.S. insurers lobbied their ideological buddies in the Harper government to first allow insane lending policies in Canada. Polices that directly led to the housing fiasco that is at the heart of the world wide finanancial crisis. Oh, and no mention that AIG is bankrupt. AIG has received billions, Peacenik has lost track, of dollars in a bailout from the U.S. government. AIG is at the centre of the black hole of bad debt. It has so many toxic assests on its balance sheet that it may not survive. And here it is shamelessly lobbying the Canadian government to create policies that are proven to be bad. Peacenik needs to calm down. AIG needs to shut its pie hole.
