The Harper government scores handily with its opposition to the special bank tax being proposed by the Obama Administration in concert with Japan and some European countries. CEOs and business leaders on the COMPAS panel agree wholeheartedly with Ottawa’s opposition to the tax. They give the government one of the highest performance scores ever for its handling of the issue - 82%. Panelists back Flaherty’s proposal for the banks to sell debt that would convert to equity in the event of a crisis but less enthusiastically than they back the government’s opposition to the special bank tax.

The key reason to oppose the tax is that Canada’s banking system is well run, according to the panelists. In their view, a supplementary reason is that creating a fund from the special tax to be available for future bailouts creates what economists call the “moral hazard” of encouraging financial institutions to engage in needless risks.

Canadian bank CEOs have also opposed the tax. In their opposition to the tax, bank leaders identified three key factors in causing the recession—the lack of common, accurate standards for measuring the risk associated with investments such as the mortgage investments that were at the centre of the collapse; banks with too little reserve capital; and mediocre skills among risk managers. Members of the panel concur. But panelists see unscrupulous conduct in the financial services sector as an even stronger factor.

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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