The Strategic Policies and Priorities Committee submits the following motion of Councillor Mihevc:

City Council, at its meeting held on June 3, 4 and 5, 1998, referred the following Motion to the Strategic Policies and Priorities Committee:

 Moved by:Councillor Mihevc

Seconded by:Councillor Walker

 "WHEREAS national polls have shown that most Canadians oppose the proposed Royal Bank-Bank of Montreal and CIBC-TD Bank mergers; and

WHEREAS the two mergers would eliminate up to 65,000 jobs, many of them in Toronto; and

WHEREAS access to capital is a major problem for Canadian small business owners and a concern for all Canadians, since small businesses create 80 percent of all new jobs in Canada; and

WHEREAS Canadian Bankers Association figures reveal that loans to Metro Toronto small businesses (those with business credit under $250,000.00), dropped from $4.11 billion in 1995 to $2.86 billion in 1996 (latest available figures); and

WHEREAS these problems reflect a lack of accountability by banks to local communities; and

WHEREAS U.S. laws such as the Community Reinvestment Act (CRA) have worked well for 20 years to ensure that U.S. financial institutions lend to small businesses and help meet other local needs, while remaining profitable; and

WHEREAS Toronto's housing shortage could be alleviated with funding through CRA-style legislation, just as agreements between U.S. community organizations and financial institutions under the CRA have financed housing in U.S. communities; and

WHEREAS a federal Task Force on the Future of the Canadian Financial Services Sector is reviewing financial institution legislation, with a report due in September; and

WHEREAS there is growing support for information disclosure and public accountability requirements for financial institutions as expressed in the 1997 election platforms of the federal Liberal, Progressive Conservative, NDP and Bloc Quebecois parties, and by a national coalition of over 70 groups, including the Toronto Small Business Support Organization, the Fort York Small Business Association, and the Social Planning Council;

NOW THEREFORE BE IT RESOLVED THAT Toronto City Council urges the federal government to enact legislation to ensure that Canadian financial institutions remain accountable to consumer, small business and community interests, for example:

(1)require banks to disclose the number of loan applications, as well as approvals and rejections, categorized by size of loan, size, type and location of business and gender of the business owner, to track the demand for capital and whether banks are meeting the demand;

(2)require banks to disclose reasons for rejections, loan defaults, loan losses and the number of called loans, to track the risk of lending to different sectors, communities and regions; and

(3)require other deposit-taking financial institutions to collect and disclose similar statistics to ensure a level playing field;

AND BE IT FURTHER RESOLVED THAT Toronto City Council urges the federal government to also enact requirements to determine how well financial institutions are serving consumers by requiring each institution to disclose:

(1)the number of complaints received each year, and the rate of resolving complaints;

(2)the number of lawsuits initiated by customers against the institution, and the number won, lost or settled;

(3)whether the banks are providing access to basic banking services for all residents of Canada (based on an independent audit); and

(4)the location of branches opened or closed;

AND BE IT FURTHER RESOLVED THAT Toronto City Council urge the Federal government to require the Superintendent of Financial Institutions to evaluate the above data annually and grade each financial institution's performance. The institution would receive a poor grade if the evaluation reveals, for example, that the institution arbitrarily rejects certain types of loan applicants, maintains excessive barriers to access to basic banking services, or has a high rate of complaints or successful lawsuits against the institution;

AND BE IT FURTHER RESOLVED THAT Toronto City Council support establishment of incentives for financial institutions to encourage them to improve their performance, including:

(1)as Ontario has done, federal and provincial governments should consider imposing a surtax on financial institutions, combined with a tax credit that could be applied to the surtax based on the institution's performance in meeting community needs;

(2)as Ontario has done, governments should not contract out business to financial institutions that fail to serve community needs;

(3)as in the U.S., the federal government should deny applications to expand or merge by financial institutions with a failing grade;

AND BE IT FURTHER RESOLVED THAT Toronto City Council urges the federal government to require banks and other financial institutions to:

(1)fund a truly independent ombudsman with the power to make binding rulings;

(2)guarantee everyone living in Canada an account with a deposit-taking financial institution, including the option or a low-cost, no-frills account, and protection from arbitrary and excessive holding of cheques; and

(3)facilitate the startup of a Financial Consumer Organization (FCO) by enclosing the FCO's flyer periodically in their customer mailings."