CMHC shrugs off 'bubble' talk, defends role in debt financing

Most summers, federal Finance Minister Jim Flaherty gathers with a group of CEOs, academics and policy wonks in the quiet Quebec village of Wakefield. Two years ago, Robert P. Kelly, the newly minted chairman of the Canada Mortgage and Housing Corp., was among the 25 invitees who attended the August, 2011 retreat. At the time, the 59-year-old Haligonian inhabited a corner office on Wall Street as chief executive officer of The Bank of New York Mellon, the fifth largest in the U.S.

OTTAWA, Ont. — Canada Mortgage and Housing Corp. president and CEO Karen Kinsley is stepping down after a quarter century with the provider of mortgage loan insurance. Kinsley announced the move in what she described as her 10th and final message for CMHC’s annual report and at a time that Ottawa has been moving to reduce taxpayer exposure to housing market debt. “CMHC has been my home away from home for 25 years and I cannot adequately express how proud I am of our achievements,” Kinsley wrote.

One major factor behind Canadian banks being the envy of the financial world is that they get so much help from the federal government. But there may be strings attached to that security — one analyst is predicting that the big banks could actually get hit with the bill in the unlikely event that Canada Mortgage and Housing Corp. — which insures about $560-billion worth of the country’s mortgages — ever needs to be bailed out.

Former Wall Street banker Robert P. Kelly has been appointed chair of the Canada Mortgage and Housing Corporation (CMHC) board of directors. Kelly, who is also a former executive of Toronto Dominion Bank, assumes his role at the helm of the 10-member board immediately for a five-year term.

On the one hand, Bloomberg today tells us retail demand for stocks is as hot as ever:

OTTAWA — The Bank of Canada should raise interest rates now because five years of low rates are creating distortions in the economy, such as excessive debt and an overheated housing market, a former advisor to central bank Governor Mark Carney said on Wednesday.

Canadian Finance Minister Jim Flaherty said he’s not worried by the recent wave of businesses spinning off real estate assets into tax-preferred trusts. Canadian Tire, the country’s largest sporting goods retailer, said May 9 it will create a $3.5 billion real estate income trust, or REIT, in an initial public offering this fall, becoming the eighth company to either sell or propose such an IPO this year.