In your Aug. 15 edition, Mike Flynn came to Cliff Boldt’s defence after I had chided him for his alarmist interpretation of the 2013 Economic Action Plan of the federal government.
At issue is whether depositors’ accounts could be confiscated as had been proposed by the Government of Cyprus. Both Boldt and Flynn interpreted part of the Economic Action Plan as such a threat.
The section they referred to says that certain liabilities can be converted by the banks after consultation with the stakeholders. When the Economic Plan was issued Finance Minister Flaherty was asked on Power Play what this meant. He stated that this referred to bonds issued by the banks and certainly did not refer to deposit holders.
Here is where a great amount of logic and common sense must be applied to this matter.
Most of these bank bonds would be held by institutional investors; insurance companies, pension funds, and mutual funds. Insurance companies who must maintain liquidity would most likely demur at such conversions but the others may be willing to take shares in the banks in place of the bonds.
If there were even a hint that the government was about to attach the accounts of private depositors there would be such a run on the banks that they would fail and the deposit insurance would most definitely kick in.
The Harper government prides itself in a prudent management of economic affairs and the scenario projected by Cliff Boldt and backed by Mike Flynn is simply ludicrous.