Outlook On Banks Turns Negative

On August 8th, Standard & Poor’s (S&P) revised its outlook on Canadian banks to “negative”. Why?

According to the Globe and Mail there are concerns that the Canadian Government is becoming less willing to bail out banks in the event of a financial crisis.

This latest downgrade for the “Big Six” comes a week after a public consultation on the Federal Government’s proposed “bail-in” regime. Consultations are scheduled to run until September 12.

The consultation paper can be viewed here.

The bail-in proposal's objective is to insulate taxpayers from paying for bank failures. Government maintains that the chances of a bank failure remain slim.