This past week important meetings were taking place, headed by Toronto lawyer Purdy Crawford, to try and fix the huge asset-backed commercial paper (ABCP) mess here in Canada. At issue is some $35 billion of ABCP that has been frozen for months. Friday was supposed to be the
deadline. They didn’t quite make it so talks will have to continue into the New Year. According to an article in the Globe & Mail (Compromise raises hopes for ABCP – Boyd Erman and Sinclair Stewart, December 15), the meetings almost collapsed because Canada’s big banks
balked at the demand that they put up billions of their own money for back-up loans. But according to the article intervention by the Bank of Canada was helping to forge a last-minute deal.
The ABCP is to be swapped for new longer-term floating rate notes. We say – that’s a solution whereby money that was placed for 30 days now becomes placed for 30 years. So all that says is maybe, possibly someday you might get your money back if we are lucky and all goes well and the markets return to normal.
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