TD's power of persuasion
TD's power of persuasion
SINCLAIR STEWART AND TARA PERKINS
May 14, 2009
Globe and Mail
YORK, TORONTO — One evening last December, Ontario Premier Dalton
McGuinty strolled into Grano, a popular Italian restaurant in midtown
Toronto, clutching a document that would provide the blueprint for his
upcoming provincial budget.
He handed copies to two of his
dinner companions: Mike Lazaridis, co-founder of BlackBerry maker
Research In Motion; and Carol Stephenson, dean of the Richard Ivey
School of Business at the University of Western Ontario.
The third guest, Toronto-Dominion Bank chief economist Don Drummond, didn't need to see the report. He wrote it.
Drummond's policy paper, “Time for a vision of Ontario's economy,” may
have been dryly titled, but it was blunt: Ontario's days as an economic
powerhouse were over. It called for bold action from the government,
including spending on transit and environmental measures and – most
crucially – the harmonization of the provincial sales tax with the
A few months later, after those very
recommendations were enshrined in an ambitious budget, TD sent an
e-mail to select media quoting chief executive officer Ed Clark.
Ontario government has listened and acted on what needs to be done to
create jobs and growth in the Ontario economy,” Mr. Clark said.
What he didn't say, at least not explicitly, was that Queen's Park had accepted TD's advice.
This kind of political canniness has come to characterize the ascendance of the bank, under Mr. Clark, as a lobbying juggernaut.
Ontario budget was just the latest lobbying victory for TD – and
perhaps more remarkably, the latest victory in which there appears to
be no obvious prize for the bank. At least not in the immediate term.
taxation rules in British Columbia to sales tax harmonization in
Ontario to monetary policy in Ottawa, TD has become what many see as
Corporate Canada's most influential player on public policy – and its
most resonant voice amid the financial crisis.
Indeed, on some days, the bank can be mistaken for a shadow finance ministry.
used to say, ‘What's good for GM is good for America,'” concedes Scott
Mullin, TD's vice-president of government and community relations. “I
guess we turn that on its head and say, ‘What's good for Canada is good
for TD.' So, if we're convinced that something like tax harmonization
is good for Ontario, then we see that as having a positive impact ...
The clout is baked into the bank's corporate DNA,
most notably in the formidable triumvirate of Mr. Clark, Mr. Drummond
and Frank McKenna, three senior executives who were shaped by years of
high-level government service. They remain among the most politically
connected operators in Corporate Canada – particularly with the Liberal
And their signature can be found on public policy files across the country.
Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney
suggested in December that the big banks weren't lending enough to
consumers, it was Mr. Drummond who quickly crafted a rebuttal and sent
the presentation to other banks for their feedback. Mr. Clark took the
document to a meeting with Mr. Flaherty, Mr. Carney and the other bank
CEOs in early January.
TD was also among the first to lobby
the government to expand its CMHC mortgage purchase program, to provide
banks with more flexibility to lend to consumers – an effort that was
unveiled last October and has been twice expanded since then (although
other banks insist they were equally involved).
At the end
of April, on the eve of the Liberal Party convention in Vancouver, TD
released an in-depth study on employment insurance, calling for an
overhaul of the program. Two days later, Liberal Leader Michael
Ignatieff (who has sought counsel from Mr. Drummond and Mr. McKenna on
his economic stimulus plan) pitched a very similar proposal to the
And sources say Mr. McKenna, in particular, was
instrumental in helping to persuade British Columbia to replace its
financial institutions capital tax with a minimum tax in its budget
To understand TD's pursuit of policy influence,
one has to understand the career trajectory of these three men, and
their transition from the public sphere to the private.
Clark, who has a PhD in economics from Harvard, was once an
ideologically driven bureaucrat who helped craft the national energy
program in the Trudeau years, and was vilified in the oil patch as Red
Ed. In 1985, one of Brian Mulroney's first surgical moves as prime
minister – to great applause in the business community – was to have
Mr. Clark fired. The career bureaucrat responded by embracing the
business community, and embarking on a career as an investment banker
at Merrill Lynch.
Yet his policy roots haven't withered.
After taking the helm of TD in 2002, and spending a couple of years
fixing some of the bank's lingering issues, Mr. Clark has since carved
out a singular niche among bank CEOs, proffering advice to governments
not merely on mundane financial issues such as credit card fees, but on
issues ranging from social housing to equalization. The more powerful
TD became – as Canada's second-largest bank, and one of the largest by
market value in North America, it has clout – the more powerful became
Mr. Clark's ideas.
Within the bank, he has attempted to
engrain the importance of participating in the political process. Three
years ago, just before the federal election, he held a meeting with top
senior executives to discuss making donations to both the Liberals and
the Conservatives. The 10 officials agreed to contribute a combined
$93,000, split equally between the parties. The move raised eyebrows,
not least because only two of these people had made contributions
before the meeting. But Mr. Clark insisted at the time it was important
for individuals to pick up the financing slack after new rules barred
companies from making direct contributions.
He declined to
be interviewed for this story, but in an e-mailed statement he
attempted to play down his bank's lobbying as unexceptional.
know my peers at the other Canadian banks do the same and I believe TD
does not have any extra or special influence in this regard,” Mr. Clark
wrote. “Frankly, I would be surprised if responsible businesses large
and small were not reaching out to offer ideas on Canada's future
Even if they are, they would have a hard time matching TD's influence, much less its connections.
Mr. Drummond, a career bureaucrat in the Finance Department who some
thought should have been named to the deputy minister's job, but never
was. Frustrated by career limitations in Ottawa, Mr. Drummond jumped to
TD in 2000, as chief economist and, in the only job pairing of its kind
in Canada, head of government relations.
Less visible, but
no less influential, is Mr. McKenna, the former Liberal premier of New
Brunswick, who was recruited by Mr. Clark in 2006 to help win accounts
for TD's investment bank. Perhaps the most skilled political networker
in the country since Mr. Mulroney was at his peak, Mr. McKenna was the
sort of door-opener TD needed to win top assignments during the
financial boom years. He also has been put to work winning government
allies during the bust.
He consulted with Ontario Finance
Minister Dwight Duncan on the tax-harmonization file, sharing his
first-hand experience with blending the taxes in New Brunswick in 1997.
advice was to do it,” Mr. Duncan recently told a Globe and Mail
editorial board meeting. “His advice was that there would be political
backlash to it but if you manage it properly ... you will be able to
withstand the political backlash.”
Since the financial
crisis began, TD's top officials have held roughly four times as many
meetings with federal officials as those at RBC, the country's largest
bank, according to the federal lobbyist registry.
Mr. Clark is
very hands-on, and will request the name of individual bureaucrats who
are writing memos to ministers so he can speak to them personally.
While he and Mr. Drummond are intimately familiar with how the
bureaucracy works, Mr. McKenna brought an added dimension: knowing how
a first minister thinks.
TD does not have a Bay Street
monopoly on national issues. Ontario's Premier has a close relationship
with Gordon Nixon, CEO of Royal Bank of Canada, who formerly chaired
the Toronto Region Research Alliance and has been an active promoter of
technology and environmental programs in the province. And Ontario
routinely consults with other top bank economists, such as Bank of Nova
Scotia's Warren Jestin.
Ontario Liberal MP John McCallum, a
former RBC chief economist, cautions against attributing too much clout
to any single company. But he acknowledges that, among the banks, TD is
now the most prominent lobbyist – and likely the most skilled,
especially in the persons of Mr. Clark and Mr. Drummond.
the two of them, they have huge knowledge of how the public sector
works, and which are the most effective buttons to push. ... They're
masters at that.”