COMPAS Poll/Survey
October 9, 2008

Bailout and Fallout: Major Impacts Foreseen on Canadian Exporters and the Economy, But Business Panel Opposes Easier Loans;
The Key for U.S. Bailout to Work Is for CEOs and Investors to Pay for their Mistakes

  BDO Dunwoody Weekly CEO/Business Leader Poll By COMPAS in Canadian Business
Policy and Opinion
Consumer and Lifestyle
Business and Finance

In the wake of continual bad news from the U.S. economy, CEOs and business leaders on the COMPAS business panel believe that the repercussions for Canada will be serious, especially for exporters. Yet, they oppose by 2:1 easier government-supporter loans to exporters facing a credit crunch among their clients south of the border.

Panelists were asked for their opinions about various bailout proposals, including several from a group of top economists led by Nobel prize-winner Joseph Stiglitz. By large margins, panelists embrace the following perspectives, in descending order of enthusiasm:

  • Any bailout that protects investment bank shareholders and CEOs from paying for their failures will inevitably encourage more financial industry catastrophes in the future,
  • U.S. financial institutions need a bailout because the normal process of liquidating bad debt would take too long and cause a damaging credit crunch affecting the U.S. and world economies as a result, and
  • The bailout would work only if Wall Street’s toxic real estate mortgages were purchased by government at their true value through real auctions and not by piece-meal negotiations that risked the perception of favouritism.

A bare majority believes, with some observers, that bad accounting is a key problem and new accounting rules should require that assets be recorded at their original purchase price and not at their claimed market value.

No majority support emerges for the idea that "the real issue is not bad mortgages but a bad real estate market so that any taxpayer subsidies should help home owners, not investment houses." Meanwhile, a majority opposes the idea that "U.S. financial institutions need a bailout because it would be a mistake to allow hedge funds and other major investment houses to go bankrupt."

These are the key findings from this past week’s Internet survey of CEOs and business leaders on the COMPAS panel. The weekly business survey is undertaken for Canadian Business magazine under sponsorship of BDO Dunwoody LLP.

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