Federal Government to Buy up to $25 Bln in Insured Mortgages

TORONTO—Canada plans to buy up to $25 billion in insured residential mortgages to help cushion banks from the global financial crisis and address a "scarcity" of private-sector lending, Finance Minister Jim Flaherty said Friday. While details of the plan were slim, Flaherty stressed the program is not a bank bailout because the government is not buying equity, and that the mortgages are "high-quality assets" that are already insured by the Canada Mortgage and Housing Corp. (CMHC), a government-owned agency. The plan differs from the $700 billion rescue plan in the United States in which the government announced it would purchase toxic assets from financial institutions. "Our mortgage system is sound," Flaherty said at a news conference in Ottawa. He said the "severe and protracted" credit crunch is beginning to affect the... [read full story]