On 30 January The Conversation ran an article of mine entitled What the Free Alberta Strategy gets wrong about Canada’s banking system that was reprinted in Abpolecon.ca.
On Thursday at 8:01 a.m. I received the following email from the Free Alberta Strategy (FAS).
Robert,
The Free Alberta Strategy is back in the news again!
This time though, it’s thanks to an attack piece, which we thought we’d take some time to respond to.
In a new article published in the federal-government-funded “The Conversation” publication, Robert L. Ascah, a researcher at the also-federal-government-funded Parkland Institute, attempts to lay the hatchet to the Free Alberta Strategy.
In his piece, entitled “What the Free Alberta Strategy gets wrong about Canada’s banking system,” Mr. Ascah argues that the Alberta Independent Banking Act that is proposed in the Free Alberta Strategy report is unconstitutional because banking is an entirely federal area of jurisdiction.
Here is the key quote from Mr. Ascah:
“The Free Alberta Strategy, however, purports to allow Alberta to incorporate and regulate banks, which is clearly unconstitutional. There’s no mention that this proposal is beyond the powers of the provincial legislature.”
But, as so often seems to happen, this latest Free Alberta Strategy critic clearly doesn’t appear to have read – or taken the time to understand – what the Free Alberta Strategy is actually proposing.
While it’s true that “chartered banks” are federally regulated, that doesn’t mean that any type or form of “banking”, as the term is colloquially used, must be federally regulated.
Credit unions, for example, offer “banking” services, while not being “chartered banks” that are federally regulated.
This definition, while technical, is the crux of the issue.
And while we admit that this is very technical, when you’re talking about writing laws, technicalities matter a lot.
To be clear, here is the exact proposal from the Free Alberta Strategy report itself:
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Expanding the number of provincially regulated financial institutions and credit unions;
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Promoting private ownership of these new financial institutions; and
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Mandating that all provincially regulated financial institutions and credit unions (including ATB) remain compliant with the Alberta Sovereignty Act as it relates to the non-enforcement of federal laws and court decisions deemed to infringe unduly on Alberta’s provincial jurisdiction.
You will note, very clearly, that this proposal in our Free Alberta Strategy report talks about “provincially regulated financial institutions” not “chartered banks”.
This is because the authors of the strategy understand (unlike Mr. Ascah, apparently) that while “chartered banks” must be regulated by the federal government, “financial institutions” can be regulated by the provincial government.
This is exactly why our Free Alberta Strategy report suggests modelling any new “banks” in Alberta on ATB Financial (previously known as Alberta Treasury Branches), which is a long-standing Alberta financial institution.
(Note: Although ATB is a crown corporation, our proposal envisages privately owned and operated financial institutions, not more government-owned and operated financial institutions. Just in case anyone was worried we were suddenly advocating for bigger government!)
Just as Alberta’s credit unions are not “chartered banks” and so are not federally regulated, ATB Financial is not a “chartered bank”, and so it is not regulated by the federal government.
ATB Financial is a “financial institution” that is provincially regulated by the Alberta government under the ATB Financial Act.
This is precisely what the Free Alberta Strategy report proposes – an increase in the number of provincially regulated financial institutions in Alberta.
We can clearly see then that, despite the claim by Mr. Ascah that provincial regulation of banking is unconstitutional, the mere existence of ATB is proof that our proposal is, in fact, constitutional.
The remainder of Mr. Ascah’s article goes on to argue that if Alberta unconstitutionally incorporated its own new “chartered banks”, the federal government would cut those banks off from being able to transfer funds to other banks in Canada, making them impractical for the public to use.
Maybe it’s true that the federal government would cut off any unauthorized provincial “chartered banks” from payment mechanisms.
But, given no one is proposing Alberta incorporate its own new “chartered banks”, this entire second half of the article is an irrelevant straw man argument.
Again, the Free Alberta Strategy proposes to incorporate new provincially regulated financial institutions, like ATB.
And, in case you haven’t noticed, ATB has not been cut off from being able to transfer funds to other banks by the federal government, because – shock – the existence of ATB is perfectly constitutional.
The real question then, is whether or not the first half of Mr. Ascah’s article, where he claims we are proposing to do something unconstitutional, is simply a misunderstanding, or a deliberately misleading diatribe.
Either way, such a fundamental error really makes you wonder why the Parkland Institute would allow the article to be published at all!
Are Parkland Institute staff no longer expected to read the thing they are publicly criticizing anymore?
Are The Conversation editors no longer expected to check whether their authors have their facts straight?
Perhaps the oddest part of this whole situation is that the Parkland Institute, where Mr. Ascah works, has previously written about the benefits of having an Alberta-based, Alberta-regulated financial institution!
They did so in a report that goes into detail explaining the difference between federally regulated chartered banks and provincially regulated financial institutions!
Even stranger still – which Parkland Institute researcher do you think it was who wrote this report?
Yes, you guessed it, it was Robert L. Ascah!
It gets worse…
Once upon a time, Mr. Ascah worked at Alberta Treasury, the government department that is responsible for regulating ATB.
Then, after he worked at Alberta Treasury, Mr. Ascah went to work at ATB itself, where he was responsible for government relations, strategic planning, and economic research.
That’s right folks…
Our Free Alberta Strategy critic, who attacked us by claiming that provincially regulated financial institutions are unconstitutional, actually worked as a senior executive at both the organization he claims is unconstitutional, and the organization that is supposed to regulate the thing that he claims is unconstitutional.
We must either believe, then:
That Mr. Ascah, who has written about the benefits of provincially-regulated financial institutions, has worked for a provincially-regulated financial institution, and has worked for the organization that regulates provincially-regulated financial institutions, is somehow entirely unaware that provincially-regulated financial institutions are legal.
Or, we must believe:
That Mr. Ascah perfectly understands that provincially-regulated financial institutions are legal and that that is how ATB is established, but that it’s somehow, all of a sudden, now beneficial for him to pretend that he doesn’t, and that anyone suggesting other financial institutions be regulated in that way is suggesting something “unconstitutional”.
How could it possibly be beneficial for Mr. Ascah to pretend that this idea is unconstitutional all of a sudden, I hear you ask?
Well, the answer to that question is actually the least confusing part of his article.
Contained right at the bottom of the article, under “Disclosure statement” (and conveniently excluded from most re-publications of the piece by the media) are 9 little words:
“Robert (Bob) L. Ascah is affiliated with Alberta NDP.”
Of course, affiliated with is a little bit of an understatement in this case.
Mr. Ascah has donated thousands of dollars to the Alberta NDP for many years, while several of his Parkland Institute colleagues are actually running as Alberta NDP candidates in the 2023 Alberta election!
Now, as a non-partisan organization, we generally try to avoid pointing out the political affiliations of individual people.
As an organization, we base our support for ideas on whether the ideas are good or not, rather than on who is proposing them.
But, in this case, we’re not criticizing the person proposing the ideas, but the lack of independence and the conflict of interest inherent in a situation where federal-government-funded researchers are published by federal-government-funded websites and re-printed by federal-government-funded newspapers.
Unfortunately, in a world where government-funded academics get government funding to write government propaganda published in government-funded media, there’s really no incentive to cover the truth anymore.
As to why the federal government would want to fund researchers to write propaganda for them, and fund media outlets to publish it for them, we’ll leave that one to you to answer!
In the end, this is exactly why we need more independent research and independent distribution of ideas in our society.
The Free Alberta Strategy jealously guards our independence.
That’s why we never accept any money or resources from any government, regardless of political stripe.
But that’s also why we need your help.
We need your help so that we can continue to do research and analysis on ways in which Alberta can fight back, such as the Sovereignty Act.
We need your help to further our work to protect Alberta’s interests from a hostile and divisive federal government in Ottawa.
We need your help to grow our supporter, activist, and volunteer network across our great province.
We need your help to share our work with like-minded friends and family in order to get the word out to as many members of the public as possible.
If you’re ready to help, click here:
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Thanks for your support,
The Free Alberta Strategy Team
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Reply
First of all, to the author(s) of above fundraising letter I appreciate the serious attention given to my article in the Conversation. I also appreciate the notoriety given the article as it highlights the importance of public discourse on policies that FAS espouses. I continue to receive emails from FAS because, in spite of the claim of non-partisanship, this organization has the ear of the UCP government and I wish to understand where this government is heading.
Below I address some misleading statements in the fundraising letter and the substance of this letter.
The Conversation
For those of your donors who are not aware of The Conversation, it is “independent source of news and views, from the academic and research community, delivered direct to the public.” The Conversation began in Melbourne Australia and came to Canada in 2017. A team of professional editors work with academics who are subject matter experts to provide high-quality, authenticated, explanatory journalism to allow a better understanding of current authors and “hopefully allow for a better quality of public discourse and conversations.” Your letter however claims that The Conversation is federal-government-funded. This free, on-line publication is mainly funded by donations from the public- like your organization- as well as some universities. To conflate some university funding with federal government is misleading.
Moreover, as a contributor to this online publication I can say that the editors rigorously review every sentence and every reference to ensure it meets its high professional, journalistic standards.
Parkland Institute
I would also like to comment on your opinions about the Parkland Institute. You also claim that Parkland is also federally-funded. As a research institute at the University, it does apply for funding from various sources including the federal government. However, its operations are largely supported through donations to Parkland and also from an endowment. Here again the authors appear to be playing to their base by dragging in the federal government at every opportunity.
As you state correctly I am a Research Fellow at Parkland, now for over 3 years. During that time I have published three papers for the Institute and six articles in The Conversation. I have also penned a variety of articles in various newspapers including the Calgary Herald. I receive no compensation for these articles. To be clear, Parkland does not vet articles I contribute to various publications except those that are specifically written for the Parkland Institute.
Part of the reason I contribute to public discourse is because I believe there is an absence of good public debate on important issues vital to the future of this province. That is why a write a blog Abpolecon.ca and have recently edited A Sales Tax for Alberta- Why and How.
Independent Banking Act
We respect to the substantive points you raise in your letter, there are several arguments which I would like to clarify so members of your organization and the few who read this blog have all the relevant facts.
An independent Alberta bank is not a chartered bank
As my article states banking- not just “chartered banking”- and currency is an exclusive federal power. Section 92 (15) assigns the Parliament of Canada exclusive jurisdiction over “Banking, Incorporation of Banks, and the Issue of Paper Money.” The FAS author(s) draw the semantic distinction between chartered banks and banks. They then shift their ground to talk about “financial institutions “like credit unions and ATB Financial- a provincial agency which has all the attributes of a bank except it is not scheduled or chartered by the federal government.
ATB is not a bank even though I had to correct my former colleagues at ATB all the time when they talked about ATB as the “bank.”
With respect to credit unions they too are provincially incorporated and regulated and I was one of the policy-makers in Alberta Treasury when we completely rewrote that Act in the late 1980s. These institutions have access to the Canadian Payments system as do other provincially incorporated credit unions.
What I should have perhaps made clear in the article is that if the sovereigntists want privately-owned independent financial institutions there are already vehicles including Alberta’s loan and trust company to accomplish and to remain within a united Canada.
The authors go on to insist that my claim that “provincial regulation of banking is unconstitutional, the mere existence of ATB is proof that our proposal is, in fact, constitutional.” Wait a second here. ATB has a number of shields that do not apply to private “independent Alberta banks.” First of all, Treasury Branches, the precursor to ATB Financial, was purposively set up as branches of the provincial treasury department throughout the province. This structure allowed it to operate initially outside federal oversight and eventually grow into a very large Alberta-based financial institution.
Over the years, ATB was admitted into the payments system and became integrated into Canada’s payments system and is a direct clearer with the Bank of Canada. In its current iteration, ATB Financial is a provincial agency or Crown corporation which is an agent of the Crown. That is ATB’s legal status. It is avowedly not a bank as the FAS authors know.
The authors are correct in asserting that ATB is constitutional, but this does not prove that an Independent Banking Act is constitutional. Indeed, the constitutionality of ATB was challenged in 1983 in the case of Provincial Treasurer v. Meadow Rue Holdings. My source is the statement of defence prepared by D.L Kennedy comes from my research on Alberta Treasury and ATB in the Provincial Archives of Alberta made possible by files deposited by the late Lou Hyndman. The plaintiff argued they shouldn’t repay their loans because Treasury Branches are allegedly acting as a bank which is under federal jurisdiction. In the statement of defence Justice Martland of the Supreme Court of Canada is quoted as saying the argument is irrelevant because the loan still had to be paid back.
The FAS in its letter now wishes to backtrack and bring up semantic distinctions. Either they used the term banking deliberately and knew the proposal was unconstitutional or chose to cavalierly use the term and then jump back and say ”no, we really didn’t mean bank- we meant financial institution.”
Protection of Albertans from unjust federal seizures
Anderson, Cooper, and From, the FAS authors, presciently anticipate concerns about government of Canada’s financial enforcement which became a burning issue during the “Freedom Convoy” and the use of the Emergencies Act. Below is a extended quote from FAS:
The Government of Alberta would be unable entirely to shield Alberta businesses and individuals from the financial enforcement of federal laws, regulations, and judgments deemed unenforceable in Alberta by the Alberta Sovereignty Act should those individuals or businesses continue to entrust
their financial assets to federally regulated banks.Alberta’s Government could partially bypass this impediment by providing Albertans with more provincially regulated banking options. Alberta already owns and regulates its own banking institution30 (the ATB) and regulates credit unions (page 24).
It is this goal to shield Albertans from federal agency claims through financial institutions (bank account freezes) that is a crucial issue underlying the Free Alberta Strategy. Note the authors do not talk about financial institutions but about “provincially regulated banking options.” For readers who expect a degree of precision in policy development, I fail to see how FAS is now responding to my “attack” by now claiming “no we didn’t mean bank- we really meant financial institution.”
Banking and Financial Institutions
It could be fairly objected that credit unions and ATB are engaged in “banking.” Indeed if one reads ATB’s annual reports and those of credit unions “banking” is used throughout their reports. Does this mean that these “financial institutions” are “banks?”
Over the years, the federal Finance department has taken seriously who can in effect own banks. Under section 23 of the Bank Act, provincial government may not apply to incorporate a bank. Federal Finance is understandably nervous about provinces running banks. Even the Federal Business Development Bank is not a chartered bank. Provinces however and their agents like the Heritage Fund can own shares for investment reasons but not controlling interests.
With respect to the common usage of bank, banking and banker, section 983 of the Bank Act has gone through extensive rewrites to permit the use of the terms by specific institutions like ATB Financial and credit unions. It would appear that the federal Finance team have acceded to the use by financial institutions of terms like banking as is commonly accepted.
My misunderstanding
It is ludicrous to claim that I believed I was working for an institution which is unconstitutional. Nothing could be further from the truth. As a student of ATB history, I understand the unique, creative institution that was carved out of the Treasury department nearly 85 years ago. As the fundraising author(s) notes I co-authored a 2018 paper for Parkland which recommended a number of policy measures to utilize the power of creating loans for social and other purpose purposes.
As an aside, in a comment posted on the Conversation Raphael Solomon highlights the FAS authors’ understanding that their proposals will be vilified by Ottawa and its emanations. Solomon also thinks that the authors probably thought about the payments systems could be one of the vehicles for embarrassing and shaming Albertans into submission. Perhaps.
Banking and Sovereignty
The emergence of the modern nation state as sovereign in its jurisdiction is very much enmeshed in the evolution of national banking institutions, central banks, and the monopoly of central banks as issuer of currency. It is highly significant to me and should be o=to others in Alberta and Canada’s business community that Anderson, Cooper and From inserted a chapter on an Alberta independent banking system. If Alberta is to evolve into a sovereign nation, it will need to take control of the existing banking system. There should be no misunderstanding that the FAS and contributors to Moment of Truth are indeed playing a long game. The very fact that the strategy’s authors are thinking about an independent banking system is a testament to their separatist leanings.
Insinuations
Towards the end of the letter various claims and insinuations are made about my partisanship, etc. This does not dignify a comment.
I understand our perspectives are different, but characterizing one person, university institute, or news organizations with a simple label does little to advance public discourse.