In fact, since the financial crisis began, American taxpayers have provided more than $300 billion dollars to more than 450 companies. During that same period, from their government, Canadian banks have not received one penny. [1]
That’s a useful myth, but it happens not to be true. Doomers who run through our Canadian subject category or perform an advanced Google search for ‘ABCP’ on this site (sorry we haven’t configured our own embedded search yet 
) can easily use that information to start their own extended research on the issue. Here’s the Reader’s Digest version.
During the week of (Monday) August 6, 2007, a Bay Street firm nobody had ever heard of called Coventree seized up. Within days, the entire C$32 billion Canadian Asset Backed Commercial Paper (ABCP) industry had ceased to function. ABCP was the Canadian equivalent of America’s $300 billion Auction-Rate Securities (ARS) sector, and its failure was the first significant straw-in-the-wind for the world-wide credit crunch. A committee of bankers flew into Montreal on the following weekend, and basically formalized the freeze under the aegis of what was informally called "The Montreal Accord." This bankers’ committee basically froze the ABCP investors’ C$32 billion for 17 solid months. As early as two weeks after Coventree went down it had become obvious we were in deep, deep doodoo. This article [2] provides a snap-shot of how things stood 7 months into the crisis.
UPDATE: Things started out pretty down-beat at Doom North, what with a Halifax-origin airplane bound for Cuba being taken hostage by some poor kid demanding to be flown to Cuba. But now there’s news that a South Korean Blogger has been acquitted on charges of saying nasty things about the government,[5] an exercise not that different from what I’m doing here, except without that cloak of anonymity (does obscurity count?), and I can’t even claim the level of home-study this guy achieved 
Before his identity was exposed, Mr. Park, as Minerva, had cultivated an aura of mystery, describing himself at times as an old farmer and at others as a former Wall Street financial expert. After he was arrested, many were surprised to learn that he was an unemployed graduate of a two-year community college who spent much of his time at home scouring the Web and reading mail-order books on finance.
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Twist found this story (click the pic) from the Christian Science Monitor’s "new economy blog." If you can identify 3 of these "four horsemen of economic doom", you don’t get out enough.
Unlike in the US, where a combination of regulators and anti-fraud law enforcement people forced the perpetrators of ARS to at least commit to making their customers whole within weeks, a quirk of Canadian law allowed our banks to simply walk away from their stated commitment to stand behind this goo. It’s not exactly rocket science, since Monday August 13, 2007, Canadian banks have been receiving a subsidy in the form of their customers’ frozen ABCP assets proportionally equivalent [3] to what American taxpayers have up to now contributed to their banks.
For many years ABCP commercial paper provided the life’s blood short term financing for dozens and dozens of moderate sized Canadian enterprises like Quebec-based Pharmacie Jean Coutu. I’m not singling out [4] this particular enterprise, but it’s typical of the sound, careful businesses that suddenly found non-trivial amounts of their short-term cash magically transformed into very long term investments at the beginning of the world-wide credit crisis. As well, private individuals, public service pension funds and other long-term investors had been led to believe that the stuff was about as safe as money-market funds, just with a slightly better yield. Collectively, it is this cohort that has let Harper and Flaherty flit merrily around the world bragging about the soundness of our Banking System. It would only be fair to invest them all into the Order of Canada, but giving them their money back with interest after all this time would likely be even nicer.
Anyway, Welcome to Doom’s Monday Open Thread, where nothing’s off-topic, although Doom Family Values™ strives not to let it get too off-colour
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[1]: "Canadian Banks Avoided Mortgage Meltdown", by Jeff Glor, CBS News, April 18, 2009.
[2]: "Canadian ABCP investors bullied", by Diane Francis, National Post, March 27, 2008.
In total, $32-billion worth of this stuff was exported by Wall Street to Canadian individuals and institutions, but the big banks and brokers recently cut a deal and threw the non-bank investors under the bus. Purdy Crawford and the Bank of Canada put together a package among the banks, brokers and pension plans then wrapped it in a ribbon by getting bankruptcy protection. The smaller players were denied a seat at the table or opportunity to organize or sue even though the deal benefits big players but is ruinous for small ones. (Crawford extended an olive branch to small investors this week but without details or helping them organize.)
[3]: Canada (and it’s economy) is about 1/10th the size of the US. Therefore the C$32 billion size of ABCP is in rough proportional equivalence to the $300 billion US taxpayers’ subsidy (up to now) quoted in [1].
[4]: It just happen’s to be the kids’ local drug store in NDG, so when we visited them we could see and sense that the crisis was impacting real people. This quote from a Globe and Mail report on the issue.
The Damage
From Aug. 2 to Aug 10 [2007], the pharmacy chain placed orders with National Bank to buy $35.7-million of ABCP. Although there were signs the ABCP market was in distress, Jean Coutu’s CFO, André Belzile, said National, its bank of 45 years, made no mention of the turmoil. Three days after Jean Coutu made its last purchase, a bank official called to alert the company that repayment of some of the paper had been "temporarily" delayed. A week later, a bank official phoned again with the news that there was no money to repay the entire $35.7-million. Jean Coutu says it has no urgent need for the cash. But, if the chain has to absorb a writedown on the notes, it will "reassess" its relationship with the bank. "It’s a large amount and we want our money back," Mr. Belzile says.
[5]: "Economic Blogger Who Angered Seoul Is Acquitted", by Choe Sang-Hun, New York Times, April 20, 2009.
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