The province has offered to pay $10-million to the government for $9 billion in new mortgage debt it borrowed from the Canadian Imperial Bank of Commerce to finance its stimulus package in the early years of the Great Recession.
Premier Christy Clark announced the offer Wednesday, saying she had been asked to make it “to the extent possible.”
Clark said the money was earmarked for the provincial government’s provincial mortgage insurance fund, and that it would go toward helping pay off the government’s $1.9-billion loan.
The province’s loan forgiveness program was the subject of a 2015 lawsuit filed by B.I.S. that accused it of using its leverage over the bank to take advantage of borrowers.
“I was told that there was an extraordinary amount of interest that was going on, and I had to pay off those mortgages and pay off our debt,” Clark told reporters.
The $10.5-million loan forgiveness amount is a fraction of the $10 billion that the province owes to the CIBC, but it is the largest amount to be offered by any Canadian government.
Clark also announced the province would work with the province of Ontario to “address the outstanding issue of outstanding CIBC mortgage loans.”
The Ontario government has said it will work with CIBC to help repay the $1 billion in debt.
Ontario Premier Kathleen Wynne also announced on Wednesday that she was offering a $1-billion “loan forgiveness” program for the province’s debt.