Wednesday, December 10, 2008

A Problem with Increasing Provincial Powers

An interesting problem emerging from the US economic woes is the difficulty of federal intervention when every state has different property laws. For example, in some cases, mortgages are "no recourse" - the lender can seize the property under mortgage but no other assets. In other cases they're "recourse" - the lender can seize other assets. Even with recourse mortgages, there are all sorts of state exemptions and differences in bankruptcy protection. This is making a big mess for federal officials who are trying to devise a mortgage bailout to help home owners and stop the downward spiral in financial markets.

In an era when capital is becoming less local, it seems a mistake to make property laws more local, and yet that is the trend. We may need to rethink it. Sometimes I read arguments that it wouldn't hurt Canada if we gave provinces more autonomy, but there are practical repercussions.


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