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Gerald Butts, former jack of the advice trade in the Prime Minister’s Office and now on Twitter as Justin Trudeau’s virtual campaign guru, still hasn’t learned his lesson about giving tips after SNC-Lavalin.
Following Conservative leader Andrew Scheer’s announcement Monday – that his party would ease up on mortgage amortization from 25 to 30 years – Butts attempted to scare the plebes with a banking lesson gleaned from watching an American film about the 2008 U.S. subprime mortgage collapse.
Readers of mainstream media in Canada, especially political watchers, will recall that Butts resigned as Trudeau’s principal secretary in February, after revelations that he orchestrated and participated in attempts to pressure former attorney general Jody Wilson-Raybould to go easy on SNC-Lavalin.
SNC-Lavalin is the Québec-based construction firm, whose activity in Libya between 2001 and 2011 is the subject of bribery and corruption charges set to go to trial later this year.
Butts, Privy Council Clerk Michael Wernick, Trudeau, and Finance Minister Bill Morneau were among the cast of a failed attempt to have Wilson-Raybould divert the case to a remediation deal.
“When you boil it all down, all we ever asked the attorney general to do was to consider a second opinion,” Butts told Parliament’s Justice committee back in March when the scandal was daily headline news.
“I am not a lawyer but I have extensive experience in government.”
But not enough to prevent his boss from breaking conflict of interest law as Ethics commissioner Mario Dion’s scathing Trudeau II report concluded; the RCMP is also probing a potential obstruction of justice element to the scandal.
Which brings us to Monday’s Twitter activity from Butts, who showed his Canadian banking sector insight – informed by Hollywood’s version of the 2008 U.S. financial crisis – is as reliable as his knowledge of the law.
But don’t take The Post Millennial‘s word for it.
Anticipating that Scheer’s mortgage promise would be torqued as harbinger for a similar banking failure in Canada, we asked Carleton University professor Ian Lee, MBA director with the Sprott School of Business and former BMO mortgage manager, to explain why that perspective is poppycock.
“What happened in the states did not and could not have happened here. It could not happen because of the law. The law. I repeat that a third time, the law that made it mandatory that high ratio mortgages be insured against credit default,” Lee told TPM during a wider interview about changes in amortization rules in Canada over the past decade.
TPM’s conversation with Lee was conducted before Butts’ ill-informed Tweet and elements of it were used in TPM’s Monday coverage of Scheer’s announcement.
“There is no such law in the United States of America (and) you can lend zero (down)payment and that’s perfectly legal. The regulatory system that Canada has had forever and ever, is we regulate the downpayment between conventional mortgage and high ratio mortgage. We regulate the income requirements and gross (total) debt service ratio,” Lee continued.
“And secondly, the due diligence is completely different in the states – the two systems are incommensurate. In Canada, most banks keep most of the mortgages they book, whereas what’s happened in the states is that the banks sell off most of the mortgages they book.”
“There’s so many profound structural differences and people who make parallels between the two simply do not know what they are talking about and betray their colossal lack of knowledge.”
So there you have it: Gerald Butts, MA English Literature from McGill University on 30-year mortgage amortizations impact on the Canadian banking ecosystem, versus a business school director and former mortgage manager for Bank of Montreal.