Policy makers meet with banks on credit woes

Mon Jan 5, 2009 4:10pm EST
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By Louise Egan

OTTAWA (Reuters) - The finance minister and central bank chief met with the country's top bank executives on Monday to prod them to loosen up lending, officials said.

A spokesman for Finance Minister Jim Flaherty confirmed the meeting took place early on Monday. Bank of Canada Governor Mark Carney also attended, according to his spokesman.

Neither would comment on the meeting.

Flaherty will speak to reporters on Tuesday at 9:30 a.m., prior to pre-budget consultations in Montreal, and is expected to comment then on the talks with the banks.

The head of the Canadian Bankers Association, who also attended the meeting, said Flaherty expressed concern about the availability of credit for businesses and individuals.

"We assured the minister that the banks are committed to doing what they can to help Canada weather any recession and that they will continue to lend to credit-worthy individuals and businesses," Nancy Hughes Anthony, president and chief executive of the CBA, said in a statement.

Hughes Anthony said banks represent only half the credit market for small and mid-sized businesses and that non-bank funding sources to these businesses are the ones that have been curbing their lending.

"Banks are trying to fill the gap, but we're not able to take up all the slack from other providers," she said.   Continued...

<p>Canada's Finance Minister Jim Flaherty talks with the media after an all day meeting with the provincial and territorial finance minister in Saskatoon, Saskatchewan December 17, 2008. REUTERS/David Stobbe</p>