Jim Flaherty, the Minister of Finance, is right to have put Canada Mortgage and Housing Corp. under the oversight of the internationally well-regarded Office of the Superintendent of Financial Institutions. The federal government should go further in the same direction, by improving CMHC’s own governance and transparency.
Such changes are overdue. CMHC has grown to be in the same league as Canada’s six largest chartered banks, with assets of $281-billion as of 2011, considerably bigger than the National Bank of Canada, with assets of $167-billion. Its mortgage insurance business has become central to the Canadian economy. When it was founded in 1946, it was designed to enable veterans of the Second World War to obtain housing and help them start families, and to alleviate the severe housing shortage that quickly emerged upon their return. Today, it provides financial infrastructure for the residential real-estate transactions of a very wide range of the whole Canadian population.
There is no longer a natural connection between CMHC’s function as a mortgage insurer and its other important function in providing support for social housing for lower-income earners and, in particular, on-reserve housing for First Nations communities. Consequently, it should be divided into two Crown corporations, so that one side of CMHC’s two equally significant activities will no longer distract its leadership from the other side.
In a sense, every Canadian is a shareholder in CMHC. But it was only in April, 2011, that, thanks to an amendment of a federal statute, CMHC started to publish quarterly financial statements. This evolution should continue. The corporation is a major Canadian financial institution. It is no criticism whatsoever of the current board of directors – which now includes a lawyer with a general practice in Pictou, N.S., and a partner in a plumbing firm in London, Ont. – to say that its board should come to have a greater resemblance to the board of a chartered bank.
As it stands, CMHC is much less transparent than the Bank of Canada. With the enormous public interest in residential property and financing, it should be as open with its data as Statistics Canada.