MEDIA RELEASE

COALITION CALLS FOR EFFECTIVE DISCLOSURE OF BANK LENDING TO BUSINESS

OTTAWA - Today, a few days before CanadaÕs banks begin reporting record annual profits, the Canadian Community Reinvestment Coalition (CCRC) released its third Position Paper, calling on the federal government to enact legislation requiring banks to disclose more detailed information about their lending to business. The information is needed so that Canadians can hold banks accountable if they are not meeting the legitimate demand for capital from the small business sector, which has created over 80 percent of the jobs in Canada over the past decade.

In response to several surveys by the Canadian Federation of Independent Business (CFIB), small businesses have consistently ranked Òaccess to capitalÓ as one of their top 10 concerns. In contrast, in response to surveys by the U.S. National Federation of Independent Business (NFIB) small businesses have never ranked access to capital higher than their 43rd concern. In spite of their much greater problems with access to capital, Canadian small businesses are expected to be the job engine of our economy and stay competitive with their American counterparts.

The CCRCÕs Position Paper sets out the flaws with the current bank lending disclosure system, including the fact that the system is completely voluntary. The Position Paper recommends correcting these flaws based on the much more effective system in the U.S., as follows:

• as in the U.S., banks should be required to track demand for capital (number of loan applications) as well as approvals and rejections; ¥ in addition to tracking lending by size of loan and type of business, banks should also be required to track loan applications by location of the business (by census tract), and gender of the business owner;
• in addition to the current tracking of loan losses for each loan size category, banks should also be required to track loan defaults, and the number of loans called, in each category;
• in addition to the current tracking of loans of various amounts, banks should also track loans under $5,000 so that their micro-credit lending is disclosed;
• as in the U.S., the statistics should be analyzed by an independent government agency (such as Statistics Canada) so that the reporting of the statistics is objective and not slanted in the banksÕ favour as is currently the case; and
• other deposit-taking financial institutions, and Crown financial institutions, should be required to collect and disclose similar statistics, and also foreign financial institutions if barriers to foreign bank entry to Canada are lowered.

ÒWithout effective disclosure of banksÕ lending to business,Ó said Luc Lapointe, Coordinator of the CCRC, Òthe federal government cannot hold banks accountable if they are not supporting the key job-creating small business sector.Ó