Government must put the brakes on Bay St. and prevent windfall pandemic payouts
OTTAWA – An upcoming announcement from Canada’s banking regulator has the financial sector salivating at the prospect of gargantuan payouts. Analysts predict that the Office of the Superintendent of Financial Institutions (OSFI) will announce this week that they will relax a ban on dividends and share buybacks.
“The banks now want to reward themselves and investors with windfall gains that come as a result of government support during the pandemic. Excessive payouts to investors, while support for people is being cut off by the government, is just not right,” said Bea Bruske, President of the Canadian Labour Congress. “Rather than allowing this pandemic to further entrench existing inequalities and allow the gap between the rich and poor to widen, the federal government should instruct OSFI to maintain restrictions on shareholder payouts, and immediately impose a windfall gains tax on banks and insurance companies to prevent surplus capital from being distributed as jackpot winnings to shareholders and company executives.”
When COVID-19 struck, the federal government’s first order of business was to pump money and credit into the financial sector and ease reporting requirements to reduce “the operational burden” on financial institutions. In the early days of the pandemic, the federal government and the Bank of Canada provided three-quarters of a trillion dollars in liquidity and financial support. In return, the financial regulator instructed banks and insurers to suspend share buybacks and not to increase dividend payments.
“The banks now want to reward themselves and investors with huge increases in dividends and share buybacks. The government must make sure that the big businesses that made record profits in the pandemic now pay their fair share,” said Bruske. “The government should go further, frankly, and introduce a wealth tax to begin taxing the concentrated riches of Canada’s wealthiest families to make sure everyone is contributing fairly to a more equitable society.”
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