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Bank of Canada lost $522 million in third quarter, marking first loss in its history

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By Nojoud Al Mallees in Ottawa

The Bank of Canada lost $522 million in the third quarter of this year, marking the first loss in its 87-year history.

In the central bank’s latest quarterly financial report, it says revenue from interest on its assets did not keep pace with interest charges on deposits at the bank, which have grown amid rapidly rising interest rates.

The Bank of Canada’s aggressive interest rate hikes this year have raised the cost of interest charges it pays on settlement balances deposited in the accounts of big banks.

That’s while the income the central bank receives from government bonds it holds remains fixed.

The Bank of Canada dramatically expanded its assets during the pandemic as part of its government bond purchasing program. Also known as quantitative easing, the policy was part of the central bank’s efforts to stimulate the economy.

That expansion in assets is now costing the central bank, as it paid for the government bonds with the creation of settlement balances.

Speaking before the House of Commons finance committee last week, Bank of Canada governor Tiff Macklem addressed the expected losses.

He said losses don’t affect the central bank’s ability to conduct monetary policy.

He noted the size and duration of the losses will depend on the path of interest rates and the evolution of the economy.

“Following a period of losses, the Bank of Canada will return to positive net earnings,” he said.

The Bank of Canada is looking to the federal government for a solution to balance its books.

While there are a few options available, some economists say the problem before the central bank is largely an accounting one rather than a monetary policy concern.

This report by The Canadian Press was first published Nov. 29, 2022.

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Disney faces losing control of its kingdom with Florida bill

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By Mike Schneider in Orlando

ORLANDO, Fla. (AP) — Disney’s government in Florida has been the envy of any private business, with its unprecedented powers in deciding what to build and how to build it at the Walt Disney World Resort, issuing bonds and holding the ability to build its own nuclear plant if it wanted.

Those days are numbered as a new bill released this week puts the entertainment giant’s district firmly in the control of Florida’s governor and legislative leaders in what some see as punishment for Disney’s opposition to the so-called “Don’t Say Gay” lawchampioned by Republican Gov. Ron DeSantis and the Republican-controlled Legislature.

“Disney won’t like it because they’re not in control,” said Richard Foglesong, professor emeritus at Rollins College, who wrote a definitive account of Disney’s Reedy Creek Improvement Districtin his book, “Married to the Mouse: Walt Disney World and Orlando.”

With that loss of control comes an uncertainty about how Disney’s revamped government and Walt Disney World, which it governs, will work together — whether the left hand always will be in sync with the right hand as it has been with the company overseeing both entities.

The uniqueness of Disney’ government, where building inspectors examine black box structures holding thrill rides instead of office buildings, also complicates matters. The district essentially runs a midsize city. On any given day, as many as 350,000 people are on Disney World’s 27,000 acres (11,000 hectares) as theme park visitors, overnight hotel guests or employees. The 55-year-old district has to manage the traffic, dispose of the waste and control the plentiful mosquitoes.

“What kind of control is preferable? Control by a private business or corporation, or control by appointed officials, appointed by governor of the state?” Foglesong said. “Will they have the expertise to be able to make the new district work as efficiently as the old district works?”

The bill prohibits anybody who has worked or had a contract with a theme park or entertainment complex in the past three years, or their relatives, from serving on the revamped district’s board of supervisors, a prohibition that some experts say eliminates people with expertise in the field.

The bill’s sponsor, Florida Rep. Fred Hawkins, a Republican from St. Cloud, defended the exclusion Tuesday.

“This was a provision I requested,” Hawkins said. “We want to try to avoid any conflicts of interest of the new board members.”

Under the bill’s proposals, Florida’s governor appoints the five-member board of supervisors to the renamed Central Florida Tourism Oversight District instead of Disney. Limits would be placed on the district’s autonomy by making it subject to oversight and regulation by state agencies, and it would be unable to adopt any codes that conflict with state regulations. The district also would no longer have the ability, if it wanted, to own and operate an airport, stadium, convention center or nuclear power plant.

DeSantis started gunning for Disney’s private government last year when the entertainment giant publicly opposed what critics call the “Don’t Say Gay” law, which bars instruction on sexual orientation, gender identity and other lessons deemed not age-appropriate in kindergarten through third grade. Republican critics of the Disney district also argued it has given the company an unfair advantage over rivals in issuing bonds and financing expansion.

The Legislature passed a bill last year to dissolve the Disney government by June 2023.

Lawmakers are meeting this week for a special session to complete the state takeover of the district and approve other key conservative priorities of the governor on immigration and voter fraud. A Senate committee approved separate bills Tuesday to expand the governor’s migrant relocation program and allow the statewide prosecutor to bring election crime charges.

Florida Rep. Anna Eskamani, a Democrat from Orlando, calledthe Disney bill on Monday a “power grab” by DeSantis, a potential 2024 presidential candidate who has emerged as a fierce opponent of what he describes as “woke” policies on race, gender and public health. Such positions endear him to the GOP’s conservative base but threaten to alienate independents and moderate voters in both parties who are influential in presidential politics.

The changes proposed in the legislation were welcomed by at least one group of Reedy Creek employees — firefighters who have clashed in the past with district leaders. Tim Stromsnes, a spokesperson for Reedy Creek Professional Firefighters Local 2117, said all the current board cares about is “bonds and low-interest loans for building Disney infrastructure, and zero about treating its employees fairly.”

“We think they are going to be more receptive to first responders,” Stomsnes said Tuesday of the proposed new board. “They’re calling the governor a fascist for doing this … but he is actually fixing a fascist, Disney-owned government.”

To the relief of taxpayers in neighboring Orange and Osceola counties, the district won’t be dissolved, a prospect that had raised fears that the counties would have to absorb the district’s responsibilities and raise property taxes significantly. The Reedy Creek Improvement District has more than $1 billion in bond debt.

In a statement, Orange County said officials were monitoring the bill.

The new bill appears to address some key questions raised by last year’s legislation, primarily preserving the district’s ability to raise revenue and service outstanding debt, said Michael Rinaldi, head of local government ratings for Fitch Ratings.

Foglesong expects a legal challenge should the bill pass. Disney didn’t respond to an inquiry asking about any potential lawsuits.

“Disney works under a number of different models and jurisdictions around the world, and regardless of the outcome, we remain committed to providing the highest quality experience for the millions of guests who visit each year,” Jeff Vahle, president of Walt Disney World Resort, said in a statement.

Disney could make an argument that their rights as a private business are being undermined, Foglesong said.

“It will have political appeal, the arguments they make, in a Republican state for a potential presidential candidate,” Foglesong said. “It will be like, legally, ‘How can you do this to us?’ and politically, ‘How can you do this to a corporation that has done so much for the state of Florida?'”

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Associated Press writer Anthony Izaguirre in Tallahassee, Florida contributed to this report.

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Follow Mike Schneider on Twitter at @MikeSchneiderAP

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Alberta Premier Smith meets Prime Minister Trudeau; awkward handshake ensues

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Alberta Premier Danielle Smith has met face to face with Prime Minister Justin Trudeau in a photo opportunity punctuated by short statements and a very awkward handshake.

Smith and Trudeau met briefly to discuss shared aspirations and concerns over pending federal legislation aimed at helping Canadian workers adapt to the global move to increasing reliance on renewable energy.

The short meeting began with Trudeau reaching down to shake hands, with Smith offering a hesitant palm down hand in return, prompting Trudeau to take it and hold it in place with his thumb on top as the cameras clicked and whirred.

Smith, in Ottawa with other premiers for talks on health-care funding, faces an election this spring after successfully harnessing party anger with Trudeau to win the UCP leadership race to become premier.

She has disparaged Trudeau’s government as not a true national government and passed controversial legislation granting her government power to direct provincial agencies to ignore federal laws.

She has accused Trudeau of trying to decimate Alberta’s oil and gas industry with his green transition legislation, but now says she wants to at least try to work collaboratively.

This report by The Canadian Press was first published Feb. 7, 2023.

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