October 7, 2008 / 3:54 PM / in 9 years

Liberals mull higher deposit insurance

VANCOUVER, British Columbia (Reuters) - The leader of Canada’s main opposition party, Stephane Dion, said on Tuesday he would consider following the lead of other countries in raising the insurance limit on banking deposits.

<p>Liberal leader Stephane Dion gestures during a luncheon speech in Montreal, Quebec, October 3, 2008. REUTERS/Christinne Muschi</p>

Liberal Party leader Dion, who accused the Conservative government of ignoring the impact on Canada of the global financial storm, said he would also consider changes to cushion the impact of the crisis on older people’s retirement savings.

The economy has emerged as the major issue in the campaign leading to Canada’s October 14 general election, though the country’s banks have avoided the severe credit woes that have led to failures in the United States and Europe.

“We will review, for example, a possible change to Canada’s deposit insurance limits, by consulting with private-sector experts and officials in charge of Canada’s regulatory agencies.” Dion told a campaign rally in Vancouver. “This is something that other countries are doing. I will consider if it makes sense for Canada.”

Accounts are now insured up to C$100,000 by the Canada Deposit Insurance Corp (CDIC), although the protection does not extend to all financial institutions such as credit unions, which have separate provincial deposit insurance.

At the CDIC’s annual public meeting in Montreal on Tuesday, President and Chief Executive Guy Saint-Pierre said that the corporation covers 81 institutions. The insurance limit of C$100,000 applies to accounts held by an individual at a single member institution, he noted. But if a customer has accounts at different institutions then each account is insured up to C$100,000.

Eligible accounts include basic savings and checking accounts and term deposits that mature in less than five years, but exclude mutual funds and stocks. As of April 30, CDIC insured C$512 billion in deposits.

Dion said he could not give a specific amount he would increase protection to because, as opposition leader, he did not have full access to government financial information.

“I will not come with a firm policy until I have made proper consultations,” he told reporters, denying the plan was just an election ploy.

U.S. legislation passed last week raises the limit on accounts insured by the Federal Deposit Insurance Corp to $250,000 from $100,000.

Prime Minister Stephen Harper said the government has already taken steps to protect the economy and banking systems. The Conservatives have accused Dion of making up economic policies based on daily campaign developments.

“This is another idea picked out of thin air,” Harper said.

Harper said the Liberals had opposed earlier Conservative efforts to protect older citizens until markets improve by giving them more time to hold stocks in their registered retirement saving plans.

Reporting by Allan Dowd, Randall Palmer and Lynne Olver; editing by Peter Galloway

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