Layton slams banks for not passing interest cuts to consumers
Jack Layton is accusing Canadian banks of greediness for not passing the full benefits of the central bank's interest-rate cut on to customers.
In a co-ordinated move to free up credit and ease the financial crisis, central banks around the world — including Canada, the U.S., the U.K. and Sweden — cut short-term interest rates.
The Bank of Canada reduced the rate by half a percentage point, but the seven biggest domestic banks passed only half of that on to consumers in prime lending rates, saying the troubled markets make it more expensive to raise money.
Speaking in Thompson, Man., on Wednesday, Layton expressed "profound disappointment" that customers won't enjoy the full benefits of the cut and accused the banks of gouging consumers to protect their fat salaries and huge profits.
Layton said the central banks' decision was intended as a public policy measure implemented to try to help the economic situation.
"And the [domestic banks'] first consideration was for themselves, not for the broader economy," he accused. "I think it's very disappointing.
"I believe a lot of Canadians are going to ask why this has happened, and I think the CEOs have some explaining to do."
Dion, Flaherty wary about interference
Layton has railed against banks and oil companies throughout the campaign leading up to the Oct. 14 election, often pointing to huge profits and accusing them of gouging consumers.
Among the measures already proposed by the NDP to end gouging practices are banning ATM fees, capping interest rates and fees charged on so-called payday loans and creating an ombudsman position for fuel prices.
Asked about the same issue in an interview with CBC's Peter Mansbridge, Liberal Leader Stéphane Dion said, if elected, he would examine whether the situation could be rectified without inappropriate government interference.
"We need to consult with the regulatory agencies to see if there's something that is justifying such a reaction," said Dion.
Earlier Wednesday, Finance Minister Jim Flaherty, a Conservative candidate running for re-election, said he wouldn't advise Canada's banks on whether to fully pass rate cuts to consumers.
"I don't give the banks guidance on what they should do or shouldn't do," he said. "They respond to the steps taken by the Bank of Canada as they see fit. We have a competitive banking system."
TD Canada Trust, one of Canada's largest mortgage lenders, was the first to say it would only cut its prime lending rate by a quarter percentage point.
CIBC, Royal Bank of Canada, Scotiabank, Bank of Montreal, National and Laurentian soon followed suit.
With the Canadian Press