The Canadian Moral Hazard Corporation

[James]

A bit frightening. Excerpt I saw quoted on Vancouver Condo Info:

The Canadian mortgage market is dominated by the Canadian Mortgage and
Housing Corporation (CMHC) and this government-owned company operates
in much the same way as Fannie Mae and Freddie Mac. The CMHC insures
and guarantees mortgages as well as buys mortgages from banks in order
to issue mortgage-backed securities that trade in the secondary
market. In comparison to Fannie Mae though, the prognosis of the CMHC
is notably worse. For instance, at the height of the housing boom in
2007 Fannie Mae had guaranteed over $2.3 trillion in mortgages, nearly
a quarter of the market. As of 2009 the CMHC guaranteed over $900
billion in mortgages, about 90% of the market. Fannie Mae had
approximately $44 billion in net assets to cover those guarantees,
giving them a leverage ratio of about 50:1. The CMHC has about $9
billion in net assets to cover theirs, with the ratio working out to a
staggering 100:1. To make matters even worse, 74% of the CMHC’s assets
are invested in those very same mortgage-backed securities. If the
Canadian housing market ever took a dive the CMHC would be bankrupt in
the blink of an eye.

From: http://www.mises.ca/posts/articles/the-canadian-moral-hazard-corporation/