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Feds say no plans to privatize CMHC

Globe and Mail report called “utterly false”

The federal government is denying a report in The Globe and Mail that says it is planning to privatize Canada's federal housing agency. The article, which cites anonymous sources linked to the Finance Minister's office, claims the federal government is weighing the sell off of Canada Mortgage and Housing Corporation's mortgage insurance and securitization businesses. “A sale is not imminent, and observers believe there is no chance it would take place until after a federal election,” states The Globe and Mail article. “Nor is there a cut-and-dried case in favor of privatization. But it's clear that the days of CMHC being a significant source of cash for the federal government are numbered – with or without privatization.” “Reports about any privatization of CMHC are unfounded, baseless, and do not even merit discussion because they are not on the agenda,” said the Hon. Diane Finley, Minister responsible for Canada Mortgage and Housing Corporation during Question Period in the House of Commons on October 16th. “We are not planning any privatization of CMHC. I repeat – we are not planning any privatization of CMHC.” Prime Minister Stephen Harper described the claim as "a rumor that is utterly false," while Finance Minister Jim Flaherty said the reports were news to him. The Globe and Mail article notes CMHC reserves are expected to rise to $9.5 billion within four years. These funds have raised a big red flag, and CMHC is now facing pressure from many sources. Private companies, for example, are ready to enter the lucrative mortgage insurance market currently dominated by CMHC. AIG United Guaranty became the third company to provide mortgage insurance in Canada in mid-October, and two more companies are expected to enter the market next year. Social housing advocates want the excess reserves to fund more affordable housing units. For its part, the federal government has signaled it wants out of the housing business altogether, arguing that housing is a provincial responsibility.

Posted on Tuesday, December 12, 2006 at 01:58AM by Registered CommenterElaine | CommentsPost a Comment

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