Should the Canadian bank­ing sys­tem be the model for a restruc­tured finan­cial sys­tem in the United States? Yes, argues Canadian jour­nal­ist Theresa Tedesco in “The Great Solvent North,” her recent Op-​​Ed piece in the New York Times.

“Has the world turned upside down?” she asks:

America, the cap­i­tal of cap­i­tal­ism, is pon­der­ing nation­al­iz­ing a hand­ful of banks. Meanwhile, Canada, whose bank­ing sys­tem had long been noto­ri­ous for its stodgy prac­tices and gov­ern­ment cod­dling, is now being cel­e­brated for those very qualities.

Tedesco writes, “The Canadian bank­ing sys­tem, which proved resilient in the global eco­nomic cri­sis, is finally get­ting its day in the sun. A recent World Economic Forum report ranked it the sound­est in the world, mostly as the result of its con­ser­v­a­tive prac­tices. (The United States ranked 40th).

In Canada, where “the five major char­tered banks, the few regional banks and hand­ful of large insur­ance com­pa­nies are all reg­u­lated by the fed­eral gov­ern­ment,” Tedesco argues that, “the big five Canadian banks — Royal Bank of Canada, Toronto-​​Dominion Bank, Bank of Nova Scotia, Canadian Imperial Bank of Commerce and Bank of Montreal — sur­vived the recent tur­moil rel­a­tively unscathed. Their bal­ance sheets remain intact and their cap­i­tal ratios are com­fort­ably above requirements.”

Perhaps, she con­cludes, “Since Mr. Obama seems to admire the Canadian bank­ing sys­tem, his admin­is­tra­tion might want to take a page out of its playbook.”

Photo ©Carolyn B. Heller