It Ain't Over til the Weight-challenged Lady Sings

In a remarkably candid talk yesterday, Ed Clark, CEO of TD Bank said (somewhat disingenuously) that while the banking sector in Canada is quite healthy, the economy (truthfully) is in terrible shape, noting that

Just because our banks didn't collapse, Canadians are running around saying, wow, aren't we terrific. But the reality is this economy is going to get whacked just as hard as economies around the world.

In other words we are far from being out of this yet. And if one reads between the lines, Clark's talk indicates that the banks face troubled times too, first because they can no longer flog off sketchy debt as securitized bonds like they once did and second because troubles in the U.S. will slow the flow of funds into Canada that banks and their customers rely on. In other words, our banks will have to act like banks. Even given a massive injection of $125 billion and much softer rules on fair value accounting, we will see how profitable and stable they are then.