Canadian regulators seize Maple Bank
How bad is Canadian bank regulation? It took German's BaFin to recognize that something was wrong at Canada's Maple Bank.
The company is described as a niche player in Canada's mortgage securitization business and it was seized today by Canadian authorities.
Here was the statement from the CMHC:
Effective immediately, Canada Mortgage and Housing Corporation (CMHC) has suspended Maple Bank GmbH - Toronto Branch as an Approved Issuer of National Housing Act Mortgage-Backed Securities (NHA MBS). The suspension is the result of restrictions placed on the operations of Maple Bank GmbH by Germany's Federal Financial Supervisory Authority (BaFin) that affect its ability to fulfill its obligations as an Approved Issuer.
CMHC provides a timely payment guarantee of interest and principal to NHA MBS investors. CMHC's guarantee of NHA MBS issued by Maple Bank GmbH - Toronto Branch are not impacted by the suspension.
Here is how Canadian mortgage trends describe Maple Bank's operations:
"According to sources, Maple bought mortgages from a handful of non-bank lenders. It also provided warehouse facilities (i.e., short-term capital to fund mortgages until they're sold to investors). Lenders would take funded mortgages, package them up, sell them to Maple and then Maple (as a former CMHC-approved issuer) would issue MBS and/or sell those mortgage pools into the Canada Mortgage Bond (CMB) program. This provided cheaper funding for lenders than simply selling their mortgage commitments to big institutional buyers."
Sound familiar?
If you look at the broader company structure, and the charges levelled by German officials, the entire thing looks like a massive tax fraud.
