A reader launchesa broadside at the CMHC:
1. Canada Mortgage and Housing Corporation (CMHC) was insuring 0% down 40 year mortgages in recent years pouring gasoline on a housing market that was already on fire. Vancouver has become one of the most unaffordable cities in the world as a result of CMHCs leadership in insuring speculative mortgages.
2. Economic fundamental do not justify house price increases in the last ten years. House prices have gone up an average of 9% a year which is far in excess of 3% growth in incomes and 2% increase in employment.
3. Mortgage debt ballooned from $431 billion in 2000 to $871 billion in 2008. This means in 2008 every man, women, and child in this country owed over $27,000 in residential mortgages. This is 60% more than the national debt for which each Canadian is on the hook.
4. As an Agent of Her Majesty in Right of Canada, CMHCs debt obligations and guarantees are direct obligations of the Government of Canada. This means taxpayers will foot the bill for up to $340 billion if CMHC tumbles.
5. CMHC has been able to meet the minimum capital requirement by OSFI since 2005 but it still fails to meet the minimum international capital requirement set out in Basel Capital Accord II.
6. Not only the government has failed to rein CMHCs reckless risk taking behaviour, it has rewarded its management with hefty pay increases of 55% to 70% between 2001 and 2008 leading to a salary and bonus of $514,000 for its president in 2008 (See CN News, March 13, 2009, Top bureaucrat wages obscene , By KATHLEEN HARRIS AND PETER ZIMONJIC, NATIONAL BUREAU) which is more than double that of any other deputy minister in the government of Canada. It is even more than the salary of Prime Minister for goodness sake. It is time to trim the hefty salaries of CMHC managers and pour that money into affordable housing.