Review by Roger Annis, Sept 20, 2012
Thieves of Bay Street, by Bruce Livesey, Random House Canada, 2012, 313 pages. ISBN 978-0-307-35963-6
The title of this new book by Bruce Livesey pretty much sums it up. And in case there should be any misunderstanding, the title is not referring to “rogue traders” or “bad apples” in the bank towers and stock trading rooms of Canada’s financial strip. No, it’s the whole financial edifice that is examined.
In the aftermath of the 2008 financial collapse, Livesey writes, U.S. liberal economist Paul Krugman called Canada’s financials “good and boring.” He comments, “I don’t think so. ‘Hear no evil, speak no evil,’ is more like it,”
Livesey is an investigative journalist and CBC television producer. He explains that the origins of the book were in the research he undertook for CBC on the financial crisis in 2008. He soon found out, “The hype about Canada’s financial business was just that.”
For one, he writes, the federal government did bail out Canada’s banks in 2008–by assisting them in moving tens of billions of dollars of bad debt off their balance sheets.
For another, Canada’s financial regulations, or more accurately, the lack thereof, have made the country a haven for white collar criminals. “Over the quarter century leading up to 2012, fewer than twenty Canadian white-collar criminals have actually gone to jail.”
The bulk of the book is a fast-paced and very readable litany of the stories of upstart or established corporate vandals who have contributed to placing the world on the edge of the economic precipice and have wrecked the lives of countless victims who placed their money, directly or indirectly, into their hands.
Appropriately enough, Livesey brings the granddaddy of them all into the picture soon enough, Conrad Black. He cites a 2003 internal inquiry into Hollinger International (part of the media empire that Black ran for several decades) describing the regime of Black and his associates as “corporate kleptocracy.”
Most interesting are not the tales of individuals–compared to Black, most are nondescript or flashes in the pan. It’s the enablers that are the biggest part of the story–the banks like RBC, BMO and CIBC that financed and covered up for the thieves; the so-called regulators that are supposed to safeguard property owners and pension funds; the judges that consistently rule against the victims; and the successive governments that turn a blind eye.
The book reminds the reader of the international reach of the Canadian banks. Thus, CIBC was an important player in several of the largest corporate collapses in history, notably Enron in 2001 and Global Crossing in 2002.
You’ve heard the story of how Canada avoided the worst of the sub-prime mortgage fiasco that took down the U.S. housing market. But you may not know of the international scale of that collapse. The banks’ “long track record of reckless risk-taking and corporate malfeasance” saw them lose some $12 billion between 2007 and 2009.
By 2007, 32 percent of the total capital in Canadian money markets, some $115 billion, was invested in asset-backed commercial paper. It crashed in a spillover effect from the U.S. subprime mortgage meltdown. An estimated $7 billion was lost by pension funds and investors of whom many could ill afford the loss; the bulk sits in promissory notes that mature in 2017.
Shadow banking and offshore tax havens? We’ve got billions of dollars of tax dodging going on every year in Canada.
Conrad Black returned to Canada earlier this year following release from a U.S. prison where he served nearly five years for fraud and obstruction of justice. He got sympathetic treatment by Canadian media, including by CBC’s Peter Mansbridge in a televised interview on May 21 that the broadcaster promo’d as “vintage” Conrad Black.
For all its interest and readability, this is not a book that points anywhere. Livesey says the answer to the whole mess he describes is to put a better regulatory regime into place over Canada’s (and the world’s) financial markets.
He doesn’t have much hope of that happening and pointedly has a dim outlook for the prospects of capitalism. He concludes the book, “As inconceivable as it seems, their decisions (the moguls of international finance), be they in pursuit of prosperity, profit or outright theft, or the results of simple incompetence, change the fortunes of nations. And until someone finds a way to curb their power over us, we are all, it seems, hostages of a system that can only lead to ruin.”
All of this has me running for more reading on the financial collapse. Friends tell me David McNally’s Global Slump: The Economics and Politics of Crisis and Resistance (2011) is a good pace to start (see a review of that book here). An interesting summary of the crisis of capitalism is contained in an eleven-minute talk, with animation, by Marxist economist David Harvey.
Roger Annis resides in Vancouver, has a bank account with one of the Big Five, and as far as he knows, his money is still there.