It took long enough. I was wondering when the Canadian media would finally cast its glance back ten years ago, to a time when our banks were pleading not penury but that they were too petite to compete with American and global rivals. It was merger mania: Royal Bank coupling with Bank of Montreal, TD conjoining with CIBC. It was, the banks maintained, the only way to survive and grow.

Jean Chrétien and his Liberal government put the kibosh on the deals, and now the master of the Shawinigan handshake can be found in today’s Globe and Mail, in an excellent article by Sinclair Stewart, crowing lightly about his foresight. He’s probably right to suggest that preventing the mergers helped insulate the Canadian banking industry from the current mess south of the border.

The new mega-banks would have promptly gone shopping for smaller U.S. banks and investment houses; as the article reports, “sources said that had RBC and BMO joined forces, one of their first targets would have been Wachovia Corp., the North Carolina bank that has been hobbled by soured mortgages”.

No doubt, if the mergers had been approved, there would have been a corresponding push for further deregulation here; and as the banks increased their penetration into U.S. markets, they would have gotten themselves even more perilously entrapped by the mortgage meltdown.

The article contains this priceless bit:

Charles Baillie, the former head of TD, believes that had the Canadian banks merged, they would have been able to resist the temptation of reckless lending that consumed Wall Street, and might be in a better position now to participate in an industry-wide buying frenzy.

… “If we had been allowed to merge, we might have thought that we were big characters and played more aggressively,” he said. “But I think it’s more likely we would have played by the same lending standards we have now.”

He’s alluding to the fact that Canadian banks are generally more cautious lenders, and therefore less likely to bundle up the loans and mortgages they hold into foolishly complicated securities packages for resale.

It’s hard to accept that the newly merged Canadian banks, eager to be key players in the big U.S. market, wouldn’t have undergone some kind of cultural transformation, making it more likely to would have followed their rivals into the same reckless practices.

Well, the Canadian banks have landed just fine without the mergers. Mid-carnage, they’re being recognized by investors as the most stable in the world, and you’ll find three of them have market valuations that put them among North America’s top ten.