CMHC knows what to do with $23B in hand, but not $700B liabilities on her shoulder ?

Apparently CMHC is hiring consultant how to mess with her $23 billions or so cash in hand. We wonder what is her strategy in case the $700 billions she is shouldering on behalf of taxpayers go belly up ?

Canada Mortgage and Housing to form investment consultant pool

BY RICK BAERT

Canada Mortgage and Housing Corp., Ottawa, is creating a pool of investment consultants to advise on its C$23.1 billion (US$22 billion) in assets, including its C$1.3 billion defined benefit pension fund, according to a posting on MERX, the Canadian government procurement website.

CMHC, Canada’s national housing agency, invests in fixed income, including real return bonds; Canadian equities; U.S. equities; EAFE equities; Canadian real estate; infrastructure; and money market funds, according to the RFP.

The RFP is at the Canadian government procurement website.

Proposals must be sent via-e-mail to EBID@cmhc-schl.gc.ca., with the subject line RFSO, file #201301577, by 2 p.m. EDT July 8. A selection will be made later in July or August, according to the RFP.

Charles Sauriol, CMHC spokesman, could not be reached by press time for further details.

Meanwhile …

Bank of Canada’s Lane warns of impact of banks’ mortgage securitization moves

BARRIE MCKENNA

The Globe and Mail

A move by major banks to securitize government-insured mortgages may be exacerbating the buildup of household debt in Canada, a top Bank of Canada official says.

Canada has seen a doubling of securitized mortgages in the past five years, deputy governor Timothy Lane warned in a speech Wednesday to financial analysts in Toronto.

“A key concern is the potential misallocation of resources away from non-mortgage lending toward mortgage credit – which, in the current economic environment, contributes to the buildup of imbalances in the household sector,” he said.

When mortgage funding is funded by debt securities, rather than deposits, “it moves lending away from its traditional on-balance-sheet model,” Mr. Lane added.

Securitized mortgages are part of the so-called shadow banking sector – financing that operates outside the tightly regulated banking industry. Shadow banking is still relatively small in Canada, equal to roughly 40 per cent of Canada’s gross domestic product, against 95 per cent share in the U.S.

Mr. Lane also said regulators need to keep a close eye on specialized mortgage lenders. “While their small size suggests that they do not pose a systemic risk, they do involve elements of shadow banking risk that call for careful monitoring,” he said.

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