The majority of mortgage lenders in Canada also still require a 20% down payment, a practice that had been virtually abandoned in the U.S. and is only now starting to become standard again. "Canadian banks entered the financial crisis with mortgages on their balance sheet that were performing assets, that were actually contributing to the profitability. They didn't have mortgages that were distressed and needed to be written down, which was a source of a lot of the trouble American banks had." Taft points out that even with more rigorous standards, and the avoidance of securitization, Canadian homeownership, as a percentage of the population, is almost identical to that of the United States -- roughly 62%. "The world, not just the U.S., is taking a page from the Canadian regulatory experience," Taft says. Simply put, that means higher levels of capital, lower levels of leverage and more liquidity for financial institutions. "The Canadian model certainly proved to work," he says. "No Canadian banks failed and, in fact, none of the major Canadian banks even cut a dividend." "Canadian corporate culture is very different, and I think that is stimulated by the banks as a whole," says Chris Kichurchak, vice president of Ohio-based Strategic Wealth Partners. "It is less driven by the pursuit of short-term riches. It really seems to be more focused on sustainable growth rather than short-term profitability." Kichurchak cites the economic premise that once a country's debt-to-GDP level crosses 90% it will inherently have a substantially slow growth for the ensuing decade. In 2008, Canada's ratio was around 50%; today it is near 60%. In the U.S., the ratio sits at about 96%. "That shows us that Canada's old-school mentality really is taking hold, and that's what we see as one of the big reasons why it has been able to really protect itself from all of the financial problems that have been going on," Kichurchak says. Taft cites a "stewardship culture" that takes hold at the "very top of the financial system." "There is no question that the Canadian bank executives manage their banks with one eye on what's good for the country as a whole," he says. "There still is a very strong sense of community at the national level in Canada.
The financial institutions believe they are responsible for facilitating economic growth and for the health of the economy. That kind of stewardship ethic is exactly what you need at major financial institutions if we are going to avoid future crises and the excesses that led to them. No amount of regulation and no amount of legislating, though it may help is, fundamentally, the answer in and of itself. You actually have to have the stewardship culture that exists in Canada. It needs to be replicated."