Bank Heist: How Our Financial Giants Are Costing You Money

R. Matt Bray is a professor of history at Laurentian University and the
co-editor of At the End of the Shift: Mines and Single-Industry Towns in
Northern Ontario.

In 1982, journalist Walter Stewart published Towers of Gold, Feet of
Clay: The Canadian Banks, an exposé of the perfidies of Canadian
banking and bankers. To his mock astonishment, this public revelation
failed to persuade the guilty parties to change their misguided ways,
so, prompted by the mid-1990s revision of the Canadian Bank Act, Stewart
renews the attack with Bank Heist.

Written in a breezy style that sometimes belies the gravity of the
charges he levels against the system, Stewart begins by exploding
long-standing myths about the system (that Canadian banks are safe
places to put our money, that they are highly regulated, efficient, and
many more), and then briefly reviews the history of banking in Canada.
The historical sketch, especially Chapter 3, “Maple Leaf Rogues,” is
the least satisfactory part of the work (it is based on sources of
questionable reliability), although this does not seriously undermine
the validity of Stewart’s main argument.

His convincingly argued thesis is that at an accelerating pace over the
past 20 years or so, Canadian banks have become laws unto themselves,
unfettered by government regulation or competitive market forces. The
result, he insists, has been poorer but more expensive service to
Canadian consumers (“Service with a Snarl”); the disadvantaging of
small business (“Giving the Business to Small Business”); reduced
competition in all financial sectors as the barriers between the
traditional Four Pillars (banks, securities dealers, trust companies,
insurance firms) collapsed (“Pulverizing the Pillars”); and
potentially much greater financial instability as the federal government
relinquishes what little regulatory power over the banking system it
once possessed, if not exercised (“Puff the Magic Watchdog”).

The evidence that Stewart presents to support these claims—partly
anecdotal, partly statistical as detailed in the appendix—is
compelling. Whether his various solutions, a mixture of the old (restore
the Four Pillars, put the banks back on reserves, recapture the Bank of
Canada) and the revolutionary (a tax on financial transactions,
five-year bank charters), would actually solve the Canadian banking
conundrum remains to be seen. Equally uncertain is whether there exists
in Canada the political will even to attempt to bell the banking cats.