Christopher Rugaber And Fatima Hussein, The Associated Press – Mar 14, 2023 / 5:15 pm | Story: 416113
Photo: The Canadian Press
A pedestrian passes a Silicon Valley Bank branch in San Francisco, Monday, March 13, 2023. As the primary regulator of the bank, the Federal Reserve is coming under sharp criticism from financial watchdogs and banking experts. (AP Photo/Jeff Chiu)
The Federal Reserve is facing stinging criticism for missing what observers say were clear signs that Silicon Valley Bank was at high risk of collapsing into the second-largest bank failure in U.S. history.
Critics point to many red flags surrounding the bank, including its rapid growth since the pandemic, its unusually high level of uninsured deposits and its many investments in long-term government bonds and mortgage-backed securities, which tumbled in value as interest rates rose.
“It’s inexplicable how the Federal Reserve supervisors could not see this clear threat to the safety and soundness of banks and to financial stability,” said Dennis Kelleher, chief executive of Better Markets, an advocacy group.
Wall Street traders and industry analysts “have been publicly screaming about these very issues for many, many months going back to last fall,” Kelleher added.
The Fed was the primary federal supervisor of the bank based in Santa Clara, California, that failed last week. The bank was also overseen by the California Department of Financial Protection and Innovation.
Now the consequences of the fall of Silicon Valley Bank, along with New York-based Signature Bank, which failed over the weekend, are complicating the Fed’s upcoming decisions about how high to raise its benchmark interest rate in the fight against chronically high inflation.
Many economists say the central bank would likely have raised rates by an aggressive half-point next week at its meeting, which would amount to a step up in its inflation fight, after the Fed implemented a quarter-point hike in February. Its rate currently stands at about 4.6%, the highest level in 15 years.
Last week, many economists suggested that Fed policymakers would raise their projection for future rates next week to 5.6%. Now it’s suddenly unclear how many additional rate increases the Fed will forecast.
With the collapse of the two large banks fueling anxiety about other regional banks, the Fed may focus more on boosting confidence in the financial system than on its long-term drive to tame inflation.
The latest government report on inflation, released Tuesday, shows that price increases remain far higher than the Fed prefers, putting Chair Jerome Powell in a tougher spot. Core prices, which exclude volatile food and energy costs and are seen as a better gauge of longer-run inflation, jumped 0.5% from January to February — the most since September. That is far higher than is consistent with the Fed’s 2% annual target.
“Absent the fallout from the bank failure, it may have been a close call, but I think it would have tipped them towards a half-point (rate hike) at this meeting,” said Kathy Bostjancic, chief economist at Nationwide.
On Monday, Powell announced that the Fed would review its supervision of Silicon Valley to understand how it might have better managed its regulation of the bank. The review will be conducted by Michael Barr, the Fed vice chair who oversees bank oversight, and will be publicly released May 1.
A Federal Reserve spokesperson declined to comment further.
Elizabeth Smith, a spokeswoman for the California Department of Financial Protection and Innovation, said, “We are actively investigating the situation and conducting a thorough review to ensure the Department is doing everything we can to protect Californians.”
By all accounts, Silicon Valley was an unusual bank. Its management took excessive risks by buying billions of dollars of mortgage-backed securities and Treasury bonds when interest rates were low. As the Fed continually raised interest rates to fight inflation, leading to higher rates on Treasurys, the value of Silicon Valley Bank’s bonds steadily lost value.
Most banks would have sought to make other investments to offset that risk. The Fed could have also forced the bank to raise additional capital.
The bank had grown rapidly. Its assets quadrupled in five years to $209 billion, making it the 16th-largest bank in the country. And roughly 94% of its deposits were uninsured because they exceeded the Federal Deposit Insurance Corporation’s $250,000 insurance cap.
That percentage was the second highest among banks with more than $50 billion in assets, according to ratings agency S&P. Signature had the fourth-highest percentage of uninsured deposits.
Such an unusually high proportion made Silicon Valley Bank highly susceptible to the risk that depositors would quickly withdraw their money at the first sign of trouble — a classic bank run — which is exactly what happened.
“I’m at a loss for words to understand how this business model was deemed acceptable by their regulators,” said Aaron Klein, a former congressional aide, now at the Brookings Institution, who worked on the Dodd-Frank banking regulation law that was passed after the 2008 financial crisis.
The bank failures will likely color an upcoming Fed review of rules that set out how much money large banks must hold in reserve. Barr said last year that he wanted to conduct a “holistic” review of those requirements, raising concerns in the banking industry that the review would lead to rules forcing banks to hold more reserves, which would limit their ability to lend.
Many critics also point to a 2018 law as softening bank regulations in ways that contributed to Silicon Valley’s failure. Pushed by the Trump administration with bipartisan support in Congress, the law exempted banks with $100 billion to $250 billion in assets — Silicon Valley’s size — from requirements that included regular examinations of how they would fare in tough economic times, known as “stress tests.”
Silicon Valley’s CEO, Greg Becker, had lobbied Congress in support of the rollback in regulations, and he served on the board of the Federal Reserve Bank of San Francisco until the day of the collapse.
Sen. Elizabeth Warren, a Democrat from Massachusetts, asked him him about his lobbying in a letter released Tuesday.
“These rules were designed to safeguard our banking system and economy from the negligence of bank executives like yourself — and their rollback, along with atrocious risk management policies at your bank, have been implicated as chief causes of its failure,” Warren’s letter said.
The 2018 law also provided the Fed with more discretion in its bank oversight. The central bank subsequently voted to further reduce regulation for banks the size of Silicon Valley.
In October 2019, the Fed voted to effectively reduce the capital those banks had to hold in reserve.
Kelleher said the Fed still could have pushed Silicon Valley Bank to take steps to protect itself.
“Nothing in that law prevented in any way the Federal Reserve supervisors from doing their job,” Kelleher said.
The Canadian Press – Mar 14, 2023 / 2:05 pm | Story: 416059
Photo: The Canadian Press
An airliner cuts through the skies over Montreal, Wednesday, Dec. 23, 2020. Flair missed ‘millions’ in payments on seized planes, leasing company says. THE CANADIAN PRESS/Paul Chiasson
The leasing company that seized four planes from Flair Airlines over the weekend says the carrier “regularly” missed payments over the past five months.
Flair found itself down by more than a fifth of its fleet after the Boeing 737 Maxes were confiscated by Airborne Capital Inc. on Saturday, forcing the airline to cancel multiple flights.
Flair has deemed the actions “extreme and unusual,” with CEO Stephen Jones telling reporters Monday the company is now 100 per cent caught up after being “a few days in arrears” with about $1 million owing on the jetliners.
Jones also claimed the seizure was the result of another carrier’s attempt to undermine Flair following “behind the scenes” negotiations between a major Canadian airline and Airborne Capital.
In a statement, the Dublin-based company says it “strongly rejects the allegations” by Flair, and that it reclaimed the planes after a five-month period when Flair frequently failed to meet its monthly payments, amounting to “millions of dollars.”
Plane leases are an increasingly hot commodity amid supply bottlenecks and high demand, but Airborne Capital says it expects “material losses” linked to the repossession and remarketing of the aircraft.
The Canadian Press – Mar 14, 2023 / 12:24 pm | Story: 416030
Photo: The Canadian Press
Ohio filed a lawsuit against railroad Norfolk Southern to make sure it pays for the cleanup and environmental damage caused by a fiery train derailment on the Ohio-Pennsylvania border last month, the state’s attorney general said Tuesday.
The federal lawsuit also seeks to force the company to pay for groundwater and soil monitoring in the years to come and economic losses in the village of East Palestine and surrounding areas, said Ohio Attorney General Dave Yost.
“The fallout from this highly preventable accident is going to reverberate throughout Ohio for many years to come,” Yost said.
No one was hurt in the Feb. 3 derailment, but half of the roughly 5,000 residents of East Palestine had to evacuate for days when responders intentionally burned toxic chemicals in some of the derailed cars to prevent an uncontrolled explosion, leaving residents with lingering health concerns. Government officials say tests over the past month haven’t found dangerous levels of chemicals in the air or water in the area.
Norfolk Southern CEO Alan Shaw apologized before Congress last week for the impact the derailment has had on East Palestine and the surrounding communities, but he didn’t make specific commitments to pay for long-term health and economic harm.
The railroad has promised more than $20 million so far to help the Ohio community recover while also announcing several voluntary safety upgrades. A message seeking comment on the lawsuit was left with Norfolk Southern.
Many in East Palestine remain outraged at the the railroad and worried about what will become of the village.
Those fears include concerns about their long-term health, their house values and the economic future for local businesses.
Carla Wilson / Times Colonist – Mar 14, 2023 / 9:50 am | Story: 415998
Photo: Glacier Media
The deadline for the federal government to decide if it will commit money for a new Island rail system is Tuesday, but there’s been no word on any decision.
Transport Canada did not respond specifically Monday when asked if an announcement would be coming on Tuesday.
Instead, it reiterated a previous statement that the department is looking into the issue.
Judges for the B.C. Court of Appeal established March 14 as the date by which the federal government needed to determine if it was going to fund resumption of rail services on the Island, which ground to a halt in 2011 because of the poor condition of the tracks.
The court decision resulted from an appeal by the Snaw-Naw-As (Nanoose) First Nation, which first went to the Supreme Court of B.C. to seek the return of 10 acres of land running through its community that had been used for the E&N rail system.
After the band lost its case, it turned to the B.C. Court of Appeal, which imposed the deadline on the federal government.
If the federal government does not support a new rail system, the First Nation could pursue its case for the return of the land.
In a statement, Transport Canada said the federal government is “actively considering the issues raised in the ruling and is committed to better understanding perspectives across Vancouver Island to inform the path forward, including those of First Nations, regional districts, and other levels of government.”
It noted that the provincial government is asking communities, municipal governments and First Nations their views for the future of the corridor, and added: “The Government of Canada’s decision-making will be informed by this engagement by the province.”
The Island Corridor Foundation, owner of the corridor that once served the defunct E&N, has spent years advocating for a new rail system. The foundation is made up of regional districts and First Nations.
Not everyone agrees resuming rail service on the line is a good idea, including four First Nations board members of the foundation, who recently quit in protest.
Proponents argue that an Island rail system moving people and freight would bring economic benefits and links to Island communities. Opponents argue that bus service would be less costly, and the rail line should be used as a cycling and walking path.
The Nanoose First Nation has said it will head back to court if the federal government decides not to support reviving Island rail service on the E&N tracks by the March 14 deadline.
The Canadian Press – Mar 14, 2023 / 9:14 am | Story: 415982
Photo: The Canadian Press
Ritchie Bros. Auctioneers Inc. says its shareholders approved the company’s deal to buy U.S. automotive salvage company IAA Inc. at a meeting Tuesday that caps months of criticism since the acquisition was announced in November.
Several Ritchie Bros. shareholders had expressed concerns about the deal and had made it clear they planned to vote against it.
Shareholder advisory firms Glass Lewis and Institutional Shareholder Services had both recommended shareholders vote against the deal, while Egan-Jones recommended they vote yes.
Investment firms Luxor Capital Group LP and Janus Investment Investors both also voiced their opposition to the deal
Janus said it believed the deal would introduce an unnecessary level of risk to Ritchie Bros. shareholders.
The Vancouver-based company offered US$12.80 per share in cash and 52.52 per cent of a Ritchie Bros. for each IAA share, and planned to pay a special one-time dividend of US$1.08 to its own shareholders if the deal passed.
The results are preliminary and the specific results have not been released.
The Canadian Press – Mar 14, 2023 / 9:05 am | Story: 415979
Photo: The Canadian Press
Canada’s main stock index was up in late-morning trading, led higher by broad gains across all sectors, while U.S. stock markets were also up.
The S&P/TSX composite index was up 241.07 points at 19,829.97.
In New York, the Dow Jones industrial average was up 471.70 points at 32,290.84. The S&P 500 index was up 78.55 points at 3,934.31, while the Nasdaq composite was up 260.94 points at 11,449.78.
The Canadian dollar traded for 73.19 cents US, compared with 72.83 cents US on Monday.
The April crude contract was up US$1 at US$73.80 per barrel and the April natural gas contract was down three cents at US$2.58 per mmBTU.
The April gold contract was down US$5.30 at US$1,911.20 an ounce and the May copper contract was down four cents at US$4.02 a pound.
The Canadian Press – Mar 14, 2023 / 7:15 am | Story: 415965
Photo: The Canadian Press
Thinking about quitting your job? You’re not alone.
Half of Canadian workers plan to look for a new job within the first six months of 2023, according to a poll by business consulting firm Robert Half.
Those most likely to make a career move include generation Z and millennial Canadians, tech workers, employees who have been with a company for two to four years and working parents, the survey of more than 1,100 professionals in Canada found.
A higher salary, better benefits and perks, more advancement opportunities and greater flexibility to choose when and where one works were among the top reasons that respondents said they would be looking for a new job.
However, while hitting send on a resignation letter can feel liberating and give you a sense of instant gratification, experts say it’s best to have a plan before quitting your job.
“I would say the big thing people need to figure out before they leave is, what’s next?” said Sarah Vermunt, a Toronto-based career coach and founder of Careergasm.
You should plan what your next chapter will entail — by researching requirements and salary ranges for new positions — so that you aren’t quitting “in a panic” and taking whatever job you land next without considering what would actually be a good fit for you, she said.
If you do take the plunge without moving to another job soon after, Vermunt said it’s helpful to consider how a gap in your resume could look to future employers.
“If you’re someone who is making a radical career change, it’s totally fine to have on your resume that you just took a sabbatical to get some training to move in a new career direction. That tracks and it makes sense,” she explained.
“But if you just sort of quit a job and have an empty spot on your resume, that is something that you’ll have to speak to.”
Having a budget or emergency fund to keep you afloat during your career transition period is also beneficial, Vermunt pointed out.
“If you know how long you can cover your expenses and if you have at least a general sense of what you want to move to next, you’re going to have way less anxiety about quitting your job,” she said.
“And it’s going to feel more possible because you know what you have to do to get to that next thing.”
Kadine Cooper, a career and life transition coach, echoed those remarks. Unless you’re in a “very toxic or unhealthy” work environment, she similarly suggests lining up your next chapter before taking a leap.
“Definitely come up with a plan before you decide to just walk away from what you currently have,” she said.
Cooper recommends networking within your current workplace and externally to explore available opportunities.
“Internally, maybe you can do a stretch assignment or job shadow another function before deciding that you’re going to exit the organization,” she said.
A former career coach in residence at the Toronto Public Library, Cooper also recommends consulting with a career coach or mentor to get a second opinion on whatever career move you plan to make. Some places like TPL offer career coaching services for free, she noted.
Quitting on a good note is crucial, Cooper added. This, in addition to continuing to foster and build relationships with your colleagues and employer, could land you a reference down the line.
“Your network is your net worth,” she said.
“The world is such a small place — you just never know when you’re going to cross bridges with someone again, so you never want to burn a bridge with anyone.”
Gina Marie, 37, quit her job as a therapist at a mental health program in Toronto in September 2022.
Before leaving the company, where she said she was attached to the benefits and job security, Marie made sure to have a financial cushion to cover her rent for several months in case things didn’t go according to plan.
She also considered whether she had enough training and skills to jumpstart her sex and intimacy coach business and pursue her dreams as an eventual psychedelic psychotherapist.
Getting into a psychedelic assisted therapy training program and having a career coach gave Marie the confidence she needed to trust in herself and her abilities, she said.
The decision to quit her job was not easy, she stressed, but it allowed her to realize her dreams, prioritize her health and work with greater flexibility to suit her desired lifestyle — she recently worked on her laptop from a jungle home just minutes away from a beach in Costa Rica.
“I was so scared of it for so long. I was like, ‘Oh my God, how am I gonna make this work?’” said Marie, who is also currently working as a private psychotherapist.
“But I did it, and it was a little bit hard of (an) adjustment at first while I was still studying, but then, come December time, I was kind of killing it.”
Her advice to other Canadians looking to quit their jobs is to be patient and to speak to others who have made a career transition that interests them.
“(This) also really, really helped me with, instead of it … being like a dream, it started to become so much more real because I saw other people doing it and I got their tips and I did it on my own time and now I honestly couldn’t be happier.”
The Associated Press – Mar 14, 2023 / 7:11 am | Story: 415964
Photo: The Canadian Press
Facebook parent Meta is slashing another 10,000 jobs and will not fill 5,000 open positions as the social media pioneer cuts costs.
The company said Tuesday it will reduce the size of its recruiting team and make further cuts in its tech groups in late April, and then its business groups in late May.
“This will be tough and there’s no way around that,” said CEO Mark Zuckerberg. “It will mean saying goodbye to talented and passionate colleagues who have been part of our success.”
The Menlo Park, California, company has invested billions of dollars to realign its focus on the metaverse. In February it posted lower fourth-quarter profit and revenue, hurt by a downturn in the online advertising market and competition from rivals such as TikTok.
The company announced 11,000 job cuts in November.
“As I’ve talked about efficiency this year, I’ve said that part of our work will involve removing jobs — and that will be in service of both building a leaner, more technical company and improving our business performance to enable our long term vision,” said Zuckerberg.
In early trading, Meta shares rose 6%.
The Associated Press – Mar 14, 2023 / 7:01 am | Story: 415961
Photo: The Canadian Press
App-based ride hailing and delivery companies like Uber and Lyft can continue to treat their California drivers as independent contractors, a state appeals court ruled Monday, allowing the tech giants to bypass other state laws requiring worker protections and benefits.
The ruling mostly upholds a voter-approved law, called Proposition 22, that said drivers for companies like Uber and Lyft are independent contractors and are not entitled to benefits like paid sick leave and unemployment insurance. A lower court ruling in 2021 had said Proposition 22 was illegal, but Monday’s ruling reversed that decision.
“Today’s ruling is a victory for app-based workers and the millions of Californians who voted for Prop 22,” said Tony West, Uber’s chief legal officer. ”We’re pleased that the court respected the will of the people.”
The ruling is a defeat for labor unions and their allies in the state Legislature who passed a law in 2019 requiring companies like Uber and Lyft to treat their drivers as employees.
“Today the Appeals Court chose to stand with powerful corporations over working people, allowing companies to buy their way out of our state’s labor laws and undermine our state constitution,” said Lorena Gonzalez Fletcher, leader of the California Labor Federation and a former state assemblywoman who authored the 2019 law. “Our system is broken. It would be an understatement to say we are disappointed by this decision.”
The ruling wasn’t a complete defeat for labor unions, as the court ruled the companies could not stop their drivers from joining a labor union and collectively bargain for better working conditions, said Mike Robinson, one of the drivers who filed the lawsuit challenging Proposition 22.
“Our right to join together and bargain collectively creates a clear path for drivers and delivery workers to hold giant gig corporations accountable,” he said. “But make no mistake, we still believe Prop 22 — in its entirety — is an unconstitutional attack on our basic rights.”
The California Legislature passed a law in 2019 that changed the rules of who is an employee and who is an independent contractor. It’s an important distinction for companies because employees are covered by a broad range of labor laws that guarantee them certain benefits while independent contractors are not.
While the law applied to lots of industries, it had the biggest impact on app-based ride hailing and delivery companies. Their business relies on contracting with people to use their own cars to give people rides and make deliveries. Under the 2019 law, companies would have to treat those drivers as employees and provide certain benefits that would greatly increase the businesses’ expenses.
In November 2020, voters agreed to exempt app-based ride hailing and delivery companies from the 2019 law by approving a ballot proposition. The proposition included “alternative benefits” for drivers, including a guaranteed minimum wage and subsidies for health insurance if they average 25 hours of work a week. Companies like Uber, Lyft and DoorDash spent $200 million on a campaign to make sure it would pass.
Three drivers and the Service Employees International Union sued, arguing the ballot proposition was illegal in part because it limited the state Legislature’s authority to change the law or pass laws about workers’ compensation programs. In 2021, a state judge agreed with them and ruled companies like Uber and Lyft were not exempt.
Monday, a state appeals court reversed that decision, allowing the companies to continue to treat their drivers as independent contractors.
The ruling might not be the final decision. The Service Employees International Union could still appeal the decision to the California Supreme Court, which could decide to hear the case.
“We will consider all those options as we decide how to ensure we continue fighting for these workers,” said Tia Orr, executive director of SEIU California.
The Canadian Press – Mar 14, 2023 / 6:56 am | Story: 415959
Photo: The Canadian Press
The head of Flair Airlines went on the offensive Monday, saying the weekend seizure of some of its planes may have been instigated by another carrier attempting to disrupt Flair’s operations.
Four leased jetliners, on which payments were overdue, were grounded Saturday after a “commercial dispute” with New York-based Airborne Capital Inc., Flair said.
CEO Stephen Jones said the growing presence of Flair and other discount carriers is a threat to the country’s two major airlines.
“We’ve come in and upset the cozy duopoly, and as a consequence people want us out of business,” Jones said at a news conference on Monday.
“And we do believe that there were negotiations going on behind the scenes between one of the majors and the lessor to hurt Flair by them offering probably above-market rates for the aircraft we’ve been leasing.”
He did not offer any specifics to back up the claim.
“While I’m not going to name names or cite evidence, I believe that there is much more to this picture than the surface that you see,” Jones said.
WestJet Airlines, Canada’s second-largest airline, did not respond to a request for comment.
Peter Fitzpatrick, spokesman for No. 1 carrier Air Canada, said the company had not spoken to any of Flair’s lessors, “nor have they come to us offering their aircraft.”
The four Boeing 737 Maxes were “only a few days in arrears” with about $1 million owing, “which is about half of one day’s sales for us,” Jones told reporters. Two additional 737s leased from Airborne Capital were not part of the group of seized planes.
“We’re 100 per cent caught up,” he added, referring to payments on leases across its 19-plane operating fleet. (The tally does not include the four seized planes.)
Jones expressed doubt about retrieving the aircraft from Airborne Capital, saying that “it would be a tough road to see them back down — this sort of precipitous hedge-fund behaviour makes negotiations tough.”
When asked whether other payments have been overdue in the past six months, Jones did not answer directly: “There’s no business, really, that doesn’t have some delays.”
Airborne Capital has not responded to multiple requests for comment over the past few days.
The abrupt seizures and subsequent accusations hint at the fierce competition playing out across the Canadian aviation industry as demand for air travel soars.
Leasing prices have skyrocketed since the COVID-19 pandemic as a result, even as domestic airfares have dropped amid a crop of new carriers — Flair, Lynx Air, Canada Jetlines — and expansions at others, said John Gradek, head of McGill University’s aviation management program.
As a result, the “slightest sneeze” in a payment plan could trigger termination of an older, cheaper lease, allowing the lessor to find a new client willing to pay more per month for the pricey planes, he said.
“If you screw up your payment with the lessor, they will take the first opportunity to seize the airplane, bring it back and then remarket it at a much higher level of revenue than you would normally get with Flair.”
That’s especially true for this particular aircraft, which is in high demand and short supply.
Gradek said 737 Max 8s can now cost lessees up to $450,000 per month versus about $150,000 in 2021, with manufacturing bottlenecks further limiting supply. A delayed payment may also tarnish Flair’s credit and reputation, making future leases even costlier, he added.
“They’re going to be stressed for cash between now and June 15,” Gradek said of smaller airlines. “They’ll be OK in the summer, but they’ll be stressed again in the fall.”
The sudden seizure of more than one-fifth of Flair’s operating fleet saw the budget carrier scramble to roll out other planes over the weekend, as passengers in Toronto, Edmonton and Waterloo, Ont., dealt with last-minute flight cancellations.
About 1,900 travellers saw their flights cancelled Saturday, with some 420 of them rebooked within three days, Jones said. Others opted for reimbursement.
Some customers posted to social media saying they’d been told their cancellations were due to maintenance issues, an oft-cited reason by airlines that does not trigger passenger compensation protocols.
“Our response on Saturday wasn’t perfect. And we accept that,” Jones said, but insisted Flair was going “above and beyond” regulatory requirements.
“I know that there were some people that were really badly impacted. I’m very sorry about that.”
No flights were cancelled Sunday or Monday as the company brought out three planes that had been waiting in the wings ahead of summer travel season, on top of a fourth freshly leased plane, he said.
If the four seized jetliners cannot be returned, Flair’s summer expansion plans may be scuppered.
“We will need to either get other aircraft in, but this is relatively short notice, or we will need to adjust the schedule, I guess is the harsh reality,” Jones said.
Canadians still reeling from memories of pandemic confinement have been eager to board flights this year — putting planes in even higher demand from airlines and leasing companies.
The number of scheduled flights by Air Canada and WestJet jumped 31 per cent to 47,362 this month from 36,062 in the same period a year earlier, according to flight data firm Cirium.
Domestic ticket prices have dropped 15 per cent from 2019 amid heightened airline competition — six carriers now ply the Toronto-Vancouver route versus two a few years ago — leaving airlines with thinner profit margins as they battle for control of the skies, according to Montreal-based travel data firm Hopper Inc.
The Canadian Press – Mar 14, 2023 / 6:54 am | Story: 415958
Photo: The Canadian Press
Federal inspectors have ruled a releaseof oilsands wastewater from Imperial Oil Ltd.’s Kearl mine is harmful to wildlife and have ordered the company to take immediate action to stop seepage from a tailings pond.
“Based on information enforcement officers have to date, the seep is believed to be deleterious, or harmful, to fish,” Environment Canada spokeswoman Nicole Allen said in a statement.
“On March 10, 2023, enforcement officers issued a Fisheries Act direction to Imperial Oil. The direction requires immediate action to contain the seep and prevent it from entering a fish-bearing waterbody.”
Seepage from the Kearl site about 70 kilometres from Fort McMurray, Alta., was first noticed in May, but neither Imperial nor the Alberta Energy Regulator kept local First Nations or provincial and federal environment officials briefed. News of the leak came out Feb. 7 in an environmental protection order from the regulator, after another release of 5.3 million litres of tailings from a catchment pond at the site.
Federal officials have said Alberta is required to notify it of such leaks within 24 hours.
The realization that nine months had passed between the discovery of the original release and the public announcement drew widespread anger from First Nations, who harvest from land near the site. Arthur Noskey, Grand Chief of the Treaty 8 First Nations, added his voice over the weekend.
“Identify the causes of Imperial’s tailings breaches and find a resolution immediately,” he wrote. “Imperial and the governments must contain tar sands’ toxic leaks.”
The government of the Northwest Territories said it should also have been informed, given a bilateral agreement it has with Alberta over the shared watershed.
Allen said government directions are tools used by the federal minister when there is an unauthorized release of a harmful substanceinto water frequented by fish or when there is a “serious and imminent danger of such an incident and immediate action is necessary.”
Imperial is complying, said company spokeswoman Lisa Schmidt in an email.
“We are responding to the direction that was provided by ECCC officials following their visit to Imperial’s Kearl site last week and we have installed surface water pumps in the area to prevent the seep from entering a fish-bearing waterbody.
“Monitoring to date at this waterbody indicates there has been no change in baseline conditions. We plan to collect the fish from this waterbody as a precaution and install a fish barrier to prevent migration.”
Alberta Premier Danielle Smith has said there were no wildlife impacts and drinking water was not compromised.
Environment Canada will continue to monitor the release cleanup, Allen said.
“Inspectors are to return to the Kearl site in the coming days to assess the measures Imperial has taken to stop the seeping, which is occurring on land near two tributaries to the Athabasca River,” she said.
“Officers are to remain at the site to monitor the cleanup as well as collect more information to see if the federal Fisheries Act has been broken.”
The Canadian Press – Mar 14, 2023 / 6:45 am | Story: 415955
Photo: The Canadian Press
As regulators move to address the stunning collapse of Silicon Valley Bank, analysts say there is limited fallout risk for the Canadian financial sector.
“Not only should the failure of [Silicon Valley Bank] not have significant negative implications for our banks, but this crisis should actually be viewed as further vindication of the Canadian banking model,” said Scotiabank analyst Meny Grauman in a client note Monday, highlighting the stability of Canada’s diversified major banks.
U.S. regulators closed the California-based bank on Friday after a bank run, where fearful depositors concerned about its solvency withdrew billions of dollars all at once. Over the weekend U.S. regulators announced measures to safeguard the financial system, including a guarantee that all deposits at the bank would be honoured. They promised the same for Signature Bank, which regulators forced closed on Sunday.
Canada’s banking regulator said late Sunday that it had seized the Canadian assets of Silicon Valley Bank, while emphasizing the limited nature of the crisis and the fact that the bank doesn’t hold any commercial or individual deposits in Canada.
“This situation is the result of circumstances particular to Silicon Valley Bank in the United States,” said Superintendent of Financial Institutions Peter Routledge in a statement.
The bank had a heavy lending focus on emerging technology and biotech companies, which experienced massive growth during the first two years of the pandemic before the sector pulled back. Tens of thousands of tech workers have been laid off in recent months, from both large and small companies, amid the downturn.
As well, the bank’s investment portfolio was overly reliant on long-term fixed-rate bonds, which dropped in value as interest rates climbed. That scenario is not really a concern for Canadian banks, said Grauman.
“The reality is that both the largest U.S. banks and the Canadian and [Latin American] banks we cover have much less significant securities holdings on a relative basis.”
Canadian banks, along with the sector globally, have also had to deal with the implications of rising interest rates, but most have been doing it better than Silicon Valley Bank, said Alfred Lehar, an associate professor of finance at the University of Calgary’s Haskayne School of Business.
“Interest rates in all the countries have been going up, and I guess some banks are better at managing this change than other banks, and Silicon Valley Bank was obviously a bank that was very poor at managing this transition.”
Canadian banks are subject to stress tests on rising interest rates and so far have performed well, said Lehar.
“Banks have passed these stress tests, so there’s good reason to believe that the Canadian banks are managing this transition to a different interest regime fairly well so far.”
The Office of the Superintendent of Financial Institutions has also been increasing safeguards around the Canadian financial system, including an increase in the domestic stability buffer that came into effect in February, along with wider leeway to increase how much banks have to set aside for a cash crunch.
It’s part of a more conservative regulatory system in Canada that helped the country manage through the global financial crisis, and be pointed to as a model on how to prudently oversee its financial system.
Silicon Valley Bank, meanwhile, was not subject to the level of scrutiny and stress testing that the biggest U.S. banks face after the Trump administration in 2018 rolled back bank regulations introduced after the financial crisis.
Canadian banks are also much less exposed to the technology sector, said National Bank analyst Gabriel Dechaine, pointing out that financial disclosures among banks that break out the sector in their reporting have exposure of between one and three per cent on their loan books.
It’s in the tech sector that the biggest effect could be felt in Canada, said Lehar, who noted that while the Canadian branch of Silicon Valley Branch was very small, it was very active in the startup space.
“Now that this opportunity is gone, it might be that going forward, it will be harder for Canadian startups to raise financing.”
The collapse of Silicon Valley Bank, the biggest bank failure in U.S. history after the collapse of Washington Mutual in 2008, has also pushed down stock prices for numerous other financial institutions.
Those include The Charles Schwab Corp. that is down over 30 per cent since last Wednesday, of which TD owns a 12 per cent stake. Dechaine noted that every 10 per cent drop in Schwab’s share price translates into a $1.8 billion decline in TD’s stake in the company.
It’s unclear how the crisis will affect TD Bank Group’s pending acquisition of U.S. bank First Horizon, but it could allow TD to negotiate better terms, said Dechaine.
Canadian bank stocks have also taken a hit in recent days, with the S&P/TSX banks index down over six per cent in the last week.