According to Mark Perry,

this recent financial crisis isn’t the first time that Canada’s banking system showed greater signs of stability and less exposure to stress than U.S. banks. In the 1930s, when 9,000 U.S. banks failed during the Great Depression, not a single bank in Canada failed. When almost 3,000 American banks failed during the Savings and Loan (S&L) Crisis, only two small Canadian banks failed in 1985, and those were the first bank failures in Canada since 1923. And while almost 200 U.S. banks have failed since the start of the global recession in early 2008, Canada remains the only industrialized country in the world that has survived the last two years of financial and economic stress without a single bank failure.

He points out that home mortgages are safer in Canada, with more down payments and more upfront mortgage insurance. Also, a Canadian cannot walk away from the mortgage–the bank can come after your personal assets if you default. Banks hold more mortgages, in part because the standard mortgage there has an interest rate that changes every five years, so that the duration mismatch is not as severe as it is with our thirty-year fixed-rate mortgages.

I had a chance to brief some members of a Congressional committee last week as part of an informal panel on the topic of the future of Freddie Mac and Fannie Mae. Our Congresspersons, including Republicans, still have a very hard time imagining a mortgage market without securitization. Perhaps they ought to make a field trip up north.