He said the FSB, operating under the direction of the Group of 20 leading economies, closely monitors the effects of new regulations for unintended consequences. Canada’s big banks emerged relatively unscathed from the global financial crisis, buoyed by strong capital ratios and conservative lending practices. They are well ahead of their U.S. and European peers in complying with higher capital requirements under the Basel III global standards. Still, the Bank of Canada says it has identified some areas of the shadow banking sector, the market-based financing done outside the regulated banks, that merit closer monitoring. In response to a question from the audience after his speech, Schembri said he saw a “potential vulnerability” in Canada’s increasingly popular mortgage investment corporations (MICs). These entities typically manage a pool of mortgages and many investors are attracted to them because of their higher yields, but the risks are also higher than with some other types of investment products. Schembri said, however, the MICs were less problematic than mortgage real estate investment trusts in the United States, which tend to be more highly leveraged. “In Canada, the mortgage investment corporations, one would consider as part of the shadow banking sector but not as tightly regulated as banks. We see this as a potential vulnerability but for the most part it’s not as serious as what we’ve seen in the United States,” he said. “Part of the shadow banking recommendations are looking at ways to address the vulnerabilities these corporations might pose,” he said.
CANADA STOCKS-TSX firms as banks offset dip in resources; eyes on Fed
Federal Reserve policy weighed on shares of natural resource companies. Focus stayed fixed on conjecture about the Fed’s plans for its stimulus program as the market combed economic data for hints on what the U.S. central bank will do next. Among the data, a private sector report said U.S. consumer confidence slipped in September as consumers’ outlook on the future darkened a bit. But German business morale improved slightly to its highest level in 17 months in September, suggesting Europe’s largest economy is making a firm recovery. “We’re still in the sideways mode,” said Sid Mokhtari, market technician and director, institutional equity research, at CIBC World Markets. “There’s no directional thesis to the market.” The Canadian market is still gauging the consequences of the Fed’s decision to keep its bond-buying program intact, he added. “The Fed has said it’s going to be data dependent, and this market is now responding to that side of the equation.” Mokhtari said he expects the benchmark Canadian index to make some gains from current levels and to end the year at about 13,400. The Toronto Stock Exchange’s S&P/TSX composite index was up 4.97 points, or 0.04 percent, at 12,816.15. Six of the 10 main sectors on the index were higher. Financials, the index’s most heavily weighted sector, rose 0.2 percent. In the group, Toronto-Dominion Bank gained 0.6 percent to C$91.90, and Royal Bank of Canada added 0.4 percent to C$66.53. The two stocks had the biggest positive influence on the index. Telus Corp was up 1 percent, at C$35.78.
Somali jihadists recruit in U.S., Canada, Europe
A Kenyan woman is helped to safety after the masked gunmen stormed the upscale mall and sprayed gunfire on shoppers and staff. Crowds gather outside the upscale shopping mall. The interior ministry urges Kenyans to keep off the roads near the mall so police can ensure everyone inside has been evacuated to safety. A policeman carries a baby to safety. Authorities said multiple shooters were at the scene. Bodies lie outside the shopping mall. A security officer helps a wounded woman outside. Elaine Dang of San Diego is helped to safety after the attack. The military asked local media not to televise anything live because the gunmen are watching the screens in the mall. Paramedics treat an injured man outside the mall. Medical personnel carry a body away. A body lies outside the mall. Gunmen shot people outside the mall as they entered it A woman is pulled by a shopping cart to an ambulance.