The Benefits of Being a Cheapo Canadian

Why are Canadian banks doing so well as compared to others in this economy? Colby Cosh says our banking prudence is in our cultural DNA: (read)

Both Kravis and Rowe suggest that the innermost core difference might be cultural — and, perhaps, ultimately a matter of the Scottish prudence and tight-fistedness that has survived in our banking DNA. This, of course, raises an obvious chicken-and-egg question: Has that spirit been preserved because we’re still using the same banks our great-grandparents did, or vice versa? International observers have noticed that our “principles-based” financial regulation takes a very different form from the “rules-based” style prevailing in the United States.

Down south, lenders are engaged in a constant chess game with the government. Were, the bank executives and the regulators have absorbed each other’s values to such a great degree — both taking the view that, to put it simply, the first goal of the Royal Bank is to make sure that there is still a Royal Bank 100 years from now — that internal audit procedures are tougher than any regulator would dare demand, and arguably more effective than any regime created solely by a narrow, politically shifting rule set. Plain old-school snobbery plays a role too. Only by means of a very powerful ethos of noblesse oblige can you staff a modern banking system, as we have, without dangling big short-term rewards in front of top executives and doing away with substantive board oversight.

My experience in technology sales has taught me there is a major difference between Canadian and American clients. Our own countrymen, we used to call "Cheapo Canadians." Money was always the object. I remember one time at a tech company, we introduced a consulting package to go with our software. A business could hire one of our people to implement our business model, and it was very expensive. On the floor, we were quietly skeptical that it was not going to sell. At first it wasn't. The VP of sales had us in for a strategy session. 90% of our potential customers were American. He told us to stop thinking like risk averse, penny pinching Canadians. If an American client said he couldn't afford it, don't believe him. He can get credit anywhere. Everybody down there, even with modest salaries, drive a BMW and live in a McMansion on credit. If you could sell the vision, money was no object. It was hyperbole, but he was right. It was 2004 and it ended up being a big seller down there. (Not so much in Canada.)