The Canadian Investor - Are Canadian Banks the Next Target in the U.S.-Canada Trade War? With Mark Cohodes and Ben Rabidoux

Episode Date: September 26, 2026

We sit down with famed short seller Mark Cohodes for a wide-ranging and at times heated discussion about the risks he sees building in Canada. Cohodes explains why he's short CIBC, revisits his famous Home Capital short, and lays out his concerns about Canadian housing, bank valuations and the possibility that financial institutions become another pressure point in escalating U.S.-Canada tensions. Ben Rabidoux also joins the conversation to offer his perspective on Canadian banks, housing and credit risk.  We also get Mark's take on the AI boom, why he believes it has bubble-like characteristics, and how investors should think about risk when markets appear priced for very little to go wrong.  Note: This episode contains explicit language and strong opinions from our guests that do not necessarily reflect the views of the hosts.  Stocks discussed: CM.TO, TD.TO, GSY.TO, GS, JPM, DB, HSBC, GLASF Watch the full video on Our New Youtube Channel! Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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no business owner has time for that. We use it for our own business, and it's the first account that actually helps our money work harder while keeping operations simple. Check it out today at eQbank.ca slash business. The banks historically are trading it the biggest valuations they ever have. And the fundamentals, in my view, haven't been worse. I'm short, CIBC, I mean, I vowed never to short stocks again after the U.S. administration got in, but I couldn't help myself.

This CIBC is just a complete mess. And they're the most accident prone of all these Canadian banks. They could just simply threaten. They could simply say we're investigating, right? And all of a sudden, that alone, once you put that sort of uncertainty, on the outlook around the big part of their franchise, you could see major downside price pressure just from that alone. And so then if you are the U.S. administration angling for a better position in trade negotiation,

well, that's a major chip you can play, especially given that our market cap here on the TSX is roughly 40% financials, of which good chunk is the bank. So we're talking about a very major bargaining chip. Yeah, I learned about Warren Buffett, what everyone learned about Warren Buffett. But I basically got involved in HomeCAP because I was involved in subprime U.S. mortgages. I was involved in that mess when that happened here, I think in the 2008-ish period. And someone said you should look at HomeCap, which was going straight up. And I looked at it, and the loans looked really funky, but they had no reserves against bad loans and bad debt.

and I started mumbling home cap and a lot of people who were inside out on their mortgages reached out to me and I said this whole thing is rotten. Dan and I had a conversation with Marco Hodes. You'll also hear Ben Rabidu that made his way on to the live stream as well. Now, before you listen to the full recording, I wanted to mention that first, there is some swearing in this podcast, so make sure you keep that in mind. Second, Mark Kohutas does have some strong opinion and uses some strong language in this episode, especially when referring to Canada.

And please remember that these are his own opinions and do not necessarily reflect the views of Dan and I. Dan and I thought it was still important to pose this on the podcast feed because at the end of the day, Mark does have a strong track record when it comes to shorting, especially for his short on home. Capital Group, something that we discuss and also the intervention of Berkshire Hathaway and Warren Buffett. Like I've said before on the podcast, even if you agree with only 5% of what he said, that's fine. I like to be open-minded to different perspectives and views. So having said that, hopefully you enjoy this discussion.

You can also view the full live recording that we posted on X slash Twitter, also on our YouTube channel. So if you wanted to see that, make sure you hop on, the recording is on there. I hope you enjoy the conversation between Dan, myself, Marcos and Ben Rabidou. Okay, welcome back to, I mean, this is our most anticipated live stream on the show so far. Daniel Fosier, host of the Canadian real estate investor podcast, Simone Belanger, host of the Canadian investor podcast, two of the leading investment podcast in Canada. And we're joined here by a special guest. Mark, tell us a little bit about yourself and what brings you to,

you know, interest in Canada's economy and more specifically the banking system. Thanks for having me. So right now I'm just a private investigator by a troublemaker. I'm doing this from Montana. I live in Montana. I live in California. And those of you who know me know I've been involved in Canada, Canadian real estate mortgage fraud since 2014. I stumbled upon at the time a reporter for Vancouver son, Sam Cooper, when he first started digging around in Chinese money and money laundering up there. And we became fast pals and have accomplished quite a lot in a dozen years. I exposed the greatest Canadian mortgage fraud, which was Home Capital Group,

I think in the mid-2000s, Jerry Salman. Yeah, 2017. I remember that headline, because back then I was concerned about Canada's, you know, reckless bull run before we got to the pandemic era, reckless bull run on the housing market. And I was when the news came out about home capital, I was like, is this a moment?

Oh, it's, it was the moment all right. But the Canadian government had to lean on Warren Buffett because no one else in Canada would play. But then I guess including all the banks. Then Home Capital was probably a couple hours away from being shut down, and it should have been shut down. And I got into it with the Ontario Security Commission, which banned the top three execs at Home Cap for Life,

Soloway, Reed, the only bank president I ever have known to wear an earring, and the CFO. They're all just complete crooks. And the OSC banned them, the OSC fined them. And AFSC, which is your guy's banking regulator, watched it all happen, has not done jack shit. And it's not done jack shit now. So after home cap, you know, all the different aspects of the Canadian government started hassling me,

including the Alberta Security Commission. They actually sued me to stop trading in a stock. I hired a lawyer, went after them, and I actually won. So they look kind of stupid as well. But whenever I show up in Canada, I either get pulled over at the border or searched for no reason. And they let me know that I'm not really welcome there. So how did you like, how did you get interest first in home capital group? Like what led you to them like initially?

Because I read quite a bit about it and it was pretty interesting. I just want your take on it and also how you learn about Warren Buffett getting a stake. I think he offered a revolving line of credit that was some cheaper shares too. Yeah, I learned about Warren Buffett when everyone learned about Warren Buffett. But I basically got involved in HomeCap because I was involved in subprime U.S. mortgages. I was involved in that mess when that happened here, I think in the 2008-ish period. And someone said you should look at HomeCAP, which was going straight up. And I looked at it, and the loans looked really funky, but they had no reserves against bad loans and bad debt.

And I started mumbling home cap, and a lot of people who were inside out on their mortgages reached out to me, and I said, this whole thing is rotten. And then I started finding employees who were at various competitors, and they had quite the stories to tell. So I started building up quite the dossier on Home Cap, and they had a huge falling out with, I think, their associate general counsel, who I got a hold of and started putting it together, met with the OSC, sent letters to Osphi, sent letters to Standard & Fours, dug it up,

up and it turned in to be just an absolute massive fraud that was covered up by the canadian government especially more no and i know the guys that cast the depot and home deep and uh home cap was about to go tits up because no one was going to roll their commercial paper their time deposits whatever it was and all the banks passed so they had this midnight meeting and all the banks just said no go, no go, no interest, no interest. So then the government went to Warren Buffett for this sweetheart deal, and Warren Buffett came in and bailed them out. So I don't think-

Who pension step in before Buffett, though, with Lewis super high interest revolving credit line? Yeah, they did, but that was set up more as a dip loan for when HCG would fail. That's how that was set up. And the guy, I think, went on BN, if I recall. I mean, this is a while ago and basically said that's what it was used for. But, you know, really when we drag it forward to today,

the dirty little secret about Canadian housing, Canadian mortgages, is all these mortgages that people have are basically interest-only loans. There's zero chance. You know, it's all kicked the can down the road. because now some of these loans are so inside out, they're so underwater, the condominium loans, the construction loans, the office building loans, everything is just completely inside out. And the reason I'm short CIBC, I mean, I vowed never to short stocks again after the U.S. administration got in, but I couldn't help myself.

This CIBC is just a complete mess. and they're the most accident prone of all these Canadian banks. And I know that the people up there, they all own their banks, and they're all comfortable with the banks, but they're at ridiculous valuations. And I think the catalyst for change is the U.S. administration, and Bessent knows, they know how bad these things are. And they know these banks are instrumental in money laundering,

drug trafficking, financing, everything that's wrong, these guys do. It's just there's no supervision by Ospy. So when you look back at what happened with TD and TD. Sorry, go ahead. $3 billion fine. That wasn't led by anything Canadian. That was all led by the United States. And I think if everyone really wants to look at the trade war, this trade war and the elbows up and the beams and the rhetoric and the renaming of Lake Ontario, Lake America, Lake Aguosaki, it doesn't even matter. That's all foreplay. That's just all foreplay. The sex show is going to be when Bessent or Trump, without any warning in the press release or the announcement will be Secretary Scott Bessent

has instructed FinCEN, which is America's financial criminal arm to invest to invest the big five or six Canadian banks for money laundering, terror financing, drug trafficking, etc. And that's going to bring everything to a fucking halt real fucking fast. I've been thinking about doing a Quebec City trip where I bring my mountain bike and the family tags along. I could spend part of the day riding while my wife and my daughter explore the city, walk around the old streets, stop for ice cream, and burn that energy in a beautiful park. Then at night, we'd all meet back up, go out for dinner, and make it a family trip. And while we're doing that, our home in Ottawa would just be sitting empty.

That's when it hit me. Listing our home on Airbnb just makes sense. Someone else could enjoy our place while we're away, whether they're here for a summer weekend, visiting family, or coming in for a big event in this city. They could explore the Rideo Canal, take the kids to the water park, catch a CFL game downtown, or just use our place as a home base to experience Ottawa like a local. The extra income could go right back toward our own trip, and we can choose to host only when it works for us.

Your home might be worth more than you think. Find out how much at Airbnb.ca.com. Quick question for you. You mentioned CIBC. I'm just curious, like you said CIBC, they're accident prone. Is it just because lack of compliance maybe or risk management, or is it because they have 50% of their portfolio in mortgage-related products? I mean, in terms of percentage, they're the most exposed of all the big things.

That's all part of it. They're also an investment bank, and if you look at it, they have the most exposure to private equity. They have the most exposure to these leverage loans. And like what HSBC used to be, there's certain accident-prone banks. I mean, Deutsche Bank is an accident-prone bank. Whenever there's a financial problem, it's always Deutsche Bank and HSBC. And the CIBC is just an accident-prone bank. It's, you know, historically trades at one point blank to two times book.

It's out of that range because people in Canada view these banks is safe. And up until now, they've been safe. You know, they're essentially branches of the Canadian government. They're monopolies. No one else is allowed to go in there and bank. They're monopolies. So people get their dividend. The banks have gone up. Everything's fine. No one's worried. But when you look at the real crux of this so-called trade thing, the trade war, it's not really trade. It's the United States does not want the Chinese Communist Party on our northern border. And as Sam Cooper,

and if you don't know Sam Cooper, you should know him or follow him or whatever. Yeah, I tried to get him to join us for this stream, but I didn't get a response, but we'll try for the next one. The thing is he's written, you know,

brilliantly how Chinese, Iranian, Mexican, all forms of crime has come in to United States through the northern border. And I think Trump is sick and tired of it. I mean, that's really what this is and it's being disguised as trade. And instead of the Canadians saying, yeah, we can negotiate with and we'll do this, they just play these games without adjusting to the issue. And, you know, and I have a Twitter. I'm at Alderlane Eggs. It's amazing how many people in Canada

either get it. They completely understand what's going on or they completely don't. There's no shade of gray on this. It's always this national thing, boo the U.S. National Anthem, this anti-Trump thing, or the government is completely messed up and we're in a bad way. Let's figure this out. I've never seen something so black and white sort of in a country. Like the United States has problems and Trump has many issues. And those issues are very, very clear. But in the United States, you can make big money. I mean, you can make money in AI.

You can make money in tech. You can make big money. And there's people who make big money. Now, if you go to Canada, Canada, think of the industries there that you can make big money, right? The Bay Street, you know, you have all the lawyers. There's the lawyer per capita in Canada is crazy. You have the banks.

You have real estate speculation, which is nine toes on the grave and one on a bar or so. So real estate speculation's done. You have heavy oil in Alberta, right? And those people want to leave, right? they want out. You have resources there too. Again, those people want out. You have incredible money laundering in Chinese and gangster crime and drugs in BC, which is running the biggest deficit in North America, lowest bond rating in North America. So what do you really have as an engine? And with all that, and with oil, it Brent at 105 or 110 a barrel, you have the Canadian dollar

at 141. I mean, where's the Canadian currency going to be when oil goes to $60 a barrel? So all the ingredients are there for quite the shake. And I don't know and I can't time when it's going to happen, nor could I really care when it's going to happen. But it's like to anyone listening to this, step back a bit. and think about it. You know, we all know, as you said,

CIBC has the most mortgage exposure in the book. People put down pennies on the dollar to control housing, and no one's marking this portfolio to market because if they did, that bank and others would be beyond inside out, which would create all sorts of other things. So my point is you don't have to short stocks, do whatever you want to do.

And by all things, own whatever you want to own. But I think these banks are at huge, huge, huge risk. And you can get headline risk. There's the smartest bank guy in Canada right there. He could only go out from bald and hair. He has hair on his ass. We have the full spectrum of ball. What they call that?

The balding spectrum on this ball? I've known where Apple do as long as I've known Sam Cooper. And he showed me some pictures when he was a kid, eight, nine, ten years old, and he had no hair then. So it's what it is.

Like, it's because he has, he's jacked. He has too much testosterone, so it's blowing all his hair off. He has huge muscles. Yeah, we'll go with that.

But Ben is the greatest bank analyst there is in Canada, and he knows his shit. And him and I didn't exactly start off on the current terms because he thought I was out of my mind on Home Cap. But we've become like really tight since then. We don't talk as much. But he's really, really sharp. And everyone should kind of pay attention to what he has to say.

But before you got on, Ben, I was just saying that this whole trade war, mumble, jumble, is the foreplay before the sex show. and people don't realize the precarious situation some of these banks are in, especially as it relates to Besson's in the United States. So I've supposed to do. Is that just a, like, it feels like all banks do this. Like you mentioned a couple of other banks that aren't Canadian, right? So you've got, you know, HSBC, Deutsche Bank, et cetera.

Like, this isn't just a Canadian issue. The problem is our proximity to the U.S. that makes it something that's now on Trump and Besson's radar. as you're saying, like, is that really the only problem for us? Because it's not like we're the most meaningful banks that are playing in the U.S. space. Like, what makes it more relevant than an HSBC or a Deutsche Bank to the U.S. administration? I think, and again, I've met with Treasury people. I think they completely understand the dynamic in what's at play.

They completely get it. The question is, before you want to start throwing punches, and throwing fists, I think it would be best to settle the trade deal and the U.S. would either look the other way or say in a nice way, clean it up. I think short of that, if the escalation keeps going,

the nuclear option isn't invading Canada because that would take about two and a half days for the U.S. to control a sovereign nation. I think Canada has three days of ammo, you know, inventory. Oh, Mark, Mark, you don't want this smoke. Don't make us come down there and burn down the White House like we did last time you really start rowdy. We'll fuck you guys up. No, but I think the banks, I think the U.S. and Canada knows it's the neon line in the sand.

And I think Bessent and Trump will use it if they need to use it. And that goes above my pay grade. But I don't, I think this TD bust for what they were doing in the U.S. was just the tip of the iceberg. And again, I don't know where the there is, but Ben knows stuff on mortgages, defaults, loan the value, trends, things like that. But it's a tricky time because the banks historically are trading it the biggest valuations they ever have. And the fundamentals, in my view, haven't been worse.

And I think your guys' rates, your guys' rates are going up. and I think the currency isn't worth of shit. So I think when you take rate up and inflation's high and the currencies for shit, I think being a bank is not an easy place to be if all things were good, all things being equal if things were legit. But when you bring in this Iranian terror financing, and again, Ben has slides on this stuff, to me, the light is flashing bright red.

It's not flashing. yellow. It's flashing red. And few, right, are allowed to speak out about it up there. The media is captured and paid for. I mean, that's, that's a fact in terms of the billions. You got Sam Cooper, you got you guys, you got Jason James, you know, you got rabidoo that he shows his face. But it's it's a fucked up deal. They don't like me speaking out. I'll, I'll tell you that. They stopped me at the border every fucking time. So what do you think, like, and Ben, feel free to chime in. Like, so what do you think the U.S. would do to try and target Canadian banks?

Would it be kind of subtle? Would it, they give Canada heads up? Say, like, you know what? Let's get a trade deal done. If not, we'll be looking at your banks soon. Like, what do you guys think might be the most plausible thing? Well, I can jump in, Mark, and you can chime in after. I should say, out the outset, the one thing I love about Mark is you never have to guess

what he's really thinking. but also from a high level, I got to tell you, Mark has the best, like, pattern recognition, intuition of anybody I've ever met. Like, he just knows when shit doesn't make sense. So I generally, you know, we may disagree on some specifics, but I think Mark's ability to flag things that are highly problematic is unparalleled. So I'm in complete agreement. We know here in Canada, we've had issues around money laundering.

We've had issues around organized crime controlling our ports. We don't really know what's coming in and out, but we know there's a lot of precursor coming in. That's pissed off the Americans. There's some valid issues here that the Americans are pissed off about. And Mark's point about the banks being very highly valued, I think is relevant at this point in time as well. They do risk, I mean, we talked about this last time I was on, they do risk becoming a bargaining chip in an escalating trade war. And so what I could see happening, Simone, just to answer your question directly is they may come out. And, you know, the sanctions that were announced gave the Treasury the ability to cut off any financial entity from the U.S. dollar clearing system as sort of like a nuclear option.

They, in my mind, they don't need to do that. They could just simply threaten. They could simply say we're investigating, right? And all of a sudden, that alone, once you put that sort of uncertainty on the outlook around a big part of their franchise, you could see major downside. price pressure just from that alone. And so then if you are the U.S. administration angling for a better position in trade negotiation, well, that's a major chip you can play, especially given that, I mean, small, you'd probably know better than me, but I think, you know, our market cap here on the TSX is roughly 40% financials of which good chunk is the bank. So we're talking about a very

major bargaining chip. And so they don't have to do anything. The pieces are in place for them to simply threaten as a bargaining chip and exert tremendous pressure. And I think, that's, to me, that's what's most likely from here. Mark may disagree on what the eventual outcome is, but I think at a very least, this becomes part of the negotiation playbook. I think it becomes the thing where, you know, we want to negotiate in good faith, you're doing what you're doing, but if you start up with this EU bullshit and you start threatening us and you show us up, here's what we're going to do. Because the dirty little secret is Bessent and everyone under Besson knows all about the Canadian.

banking system. We know also, and Ben knows, that the Canadians used to brag in the great financial crisis, the Canadian banks, none of them failed. Well, they didn't fail because there's such a thing called U.S. Treasury swap lines. In the U.S. open the swap lines to the Canadian banks so the Canadian banks wouldn't go under. So this concept that these Canadian banks are tried and true is not the case. But I agree with Ben wholeheartedly. The U.S. will throw a fastball off the plate to show the hitter what it looks like, even though it's not a strike, and say, if you want to see that again at your chin, keep it up. And this is where I think FinCEN comes in, because the U.S. at any time could pop any one of these banks at any time. So the question is,

Carney and his means and EB and all these clowns, if you want to keep playing the game, you guys are going to get it. Okay, you're going to get it. And it'll hit. They know the court of public opinion. They know the public. If people own a stock, they own the banks. For they know the public will be aware.

And I think the question is, and I don't have the answer, is when does the administration get tired of all the rhetoric? and that's not that would not be a game of chicken i'd want to play with the country in a recession this is Canada that i call arctic mexico in a recession with rates that are going to go up with a very sick currency you know trying to out muscle you know it's like a five-year-old picking on a 25-year-old right i mean you know if you have a brother who's 20 years you're younger than you, and you're 20 times stronger, you know, at some point, you're just not interested in your brother punching you in the balls. It's not going to, you know, it could happen once or twice,

but it's not a winning strategy to me. So I think, I think it's right here right now. I think the, I think the U.S. administration has had enough with Arctic Mexico. They've had enough with Ford, They've had enough with Kearney. They've had enough with that troll, whatever is, the ambassador to the Ukraine. They've had enough with everybody. I've been thinking about doing a Quebec City trip where I bring my mountain bike and the family tags along. I could spend part of the day riding while my wife and my daughter explore the city, walk

around the old streets, stop for ice cream, and burn that energy in a beautiful park. Then at night, we'd all meet back up, go out for dinner. dinner and make it a family trip. And while we're doing that, our home in Ottawa would just be sitting empty. That's when it hit me. Listing our home on Airbnb just makes sense. Someone else could enjoy our place while we're away, whether they're here for a summer weekend, visiting family, or coming in for a big event in this city. They could explore the Rideau Canal, take the kids to the water park, catch a CFL game downtown, or just use our place as a home base to experience Ottawa like a local. The extra income could go right back toward our own trip, and we can choose

to host only when it works for us. Your home might be worth more than you think. Find out how much at Airbnb.ca.com. So what's the endgame? Is it like kind of a block of Canada, US, Mexico, becoming like one block. I've heard a lot of geopolitical analysts saying that the end goal is just having the U.S. kind of control the Western hemisphere, but what we're seeing with Greenland, like, is that the end game here, like for the U.S.? I think the end game is U.S. doesn't want Canada is the 51st state. That's a no. I think they do want Alberta to be a territory or an emirate or its independent self.

I think with Alberta, you'd get Saskatchewan. you wouldn't get payments going back east to Ontario or to, yeah, Ontario, and then, and then all hell would break loose. So I think Alberta could sustain themselves, and without the payments into Ontario, I think it'd be a huge problem. And I think the U.S. would want to trade with Alberta and Saskatchewan. I don't think there's anything Ontario, Quebec, the Maritimes, or B.C., that the U.S. could give a shit about. They sure don't want to, they sure don't want to support all the immigrants that come in there. And now with the EU, it's going to get out of control.

So if you think of really, what's the asset in Canada, it's Western Canada, it's the resources, and it's the ability for free-thinking people to trade. I think that would be the ask. Ben, I think you're bang on. I think that's exactly it. I'm still not as convinced that they're actually looking to full out.

sanction Canadian banks as much as that this is a one sort of further escalation in this ongoing trade war. I'm not convinced where they're getting. I feel like it would be a threat, not a, not an actual move they would make. Well, at this point, it's hard to know. I do think they are more concerned with some of the money laundering issues than what Canadians generally want to believe. I think Mark's absolutely right. They're more concerned about that than we believe. I'm still not sure that that's the most likely outcome. To me, it's like if you wait the probability outcomes, I think they're just going to use this, at a minimum, they're going to use this as a bargaining ship. That's what I think investors should really be wrestling with.

Like what makes this mechanically a good move in the trade war, though? Like, I mean, obviously this is a huge part of Canada's economy, but like what, like, how would it, like, what would this help them progress towards getting a better deal out of Canada or getting better results? I guess they're just policing or enforcement and it looks like it's kind of that tough on crime. I know Trump's mentioned this earlier on when they were originally talking a lot about like fentanyl and all of those things. But then it kind of just disappeared. Like is this, and there's focus on other themes it feels like. Like I don't know where they would get a like stand to actually get a win since they already did the TV thing.

Well, I think if the moment that they threatened to cut off any Canadian banks, US dollar clearing capabilities, you would get a ton of calls directly to the prime minister from the heads of all these banks. being like, this is a big fucking deal. Get to the table. Let's hammer this out. The banks would be down 35% that day. Yeah, exactly. And you'd get the calls and you'd get the general population of Canada in an outrage because

they will have just lost 35% of their retirement or whatever. And people will say, let's do this trade thing. This has gotten a little out of hand. We now understand where the leverage is. What are we doing? because the U.S. knows there's crime in the casino. Ben knows there's crime in the casino. I know there's crime in the casino.

I mean, Cooper, look, I mean, for all the marbles, Cooper and I have spoken to Sissus, which is your guy's intelligence agency. I think Ben may have once or twice back in the day. the people in the know know where the bodies are buried. It's not a question of is there a crime in the casino, just like you could call a penalty in hockey every shift if you wanted to. So the question becomes,

when does the U.S. exert their leverage with the Canadian banks being the pawn, knowing that everyone has been fast and loose with rules to try to get a trade deal? or it could just simply be, we know Iran and other bad actors are running money through your guys' banks through these various conduits. We need it to stop. It's just like, you know, you never want to get a letter from the IRS, you know, looking at your taxes. You never want to get a letter from the SEC investigating your trades. The best thing that could happen is nothing. But if the U.S. wants to start keeping it up about banks, especially with what's going on in insurance down in the U.S., especially what's going on in private equity or leverage loans, especially what's going on with terrorist financing or drugs or fentanyl.

And Ben the other day on his Twitter put up all these, what are they, Iranian currency exchange in Strip. Yeah, that's the crazy one. So that one, for anybody who has to see it, can look that up on my Twitter account. But look, the bottom line is you have the U.S. administration obviously very concerned about capital fleeing Iran through various means. This has been a known weakness, this currency exchange dynamic, to the point where FinTrack has flagged at multiple times and flagged the dynamic whereby money is coming via Iran, often through a proxy, but landing through these Canadian currency exchanges and making their way. importantly, making their way into the financial system. And the point that Besson and Treasury made was, we don't really care if your financial institutions are even aware or are complicit.

We're just going to hammer this. And so when you see that sort of a threat, you see the background where FinTrack knows it's an issue. And then you go to one plaza that's literally called Iranian Plaza. And in one plaza, one block, you see 13 currency exchanges. you go like, okay, how obvious are we going to, how much are we going to flaunt this? How much are we willing to flaunt this issue before our own regulators step in to really hammer this? So I understand where the Americans are coming from this perspective.

We'll see where it lands. Do you see the regulators taking this seriously and like progressing towards like, for me, I think these conversations are important to have because like I also don't want any issues in the Canadian banking system. And I want Canada to have a productive and like properly structured. above board economy, but like, do, are we, is there something they could do in time to, to prevent, you know, like the catastrophic outcome that Mark is, is describing? Or is there like just like a, like a willful ignorance? Or I think Sam's book was literally called willful blindness, right, toward towards these matters in, in Canada. Are you talking about Canadian regulators?

Are you talking Canadian regulators? Are you talking Canadian regulators? And even, even just on Canadian regulators. I mean, Mark and I both had conversations with Canadian regulators. I'll let Mark speak to how plugged anything's there. Well, I think the Canadian regulators or branches of the government, much like the banks, I think the people inside Osfi know exactly what's going on. They're just powerless to do anything because they know they'll collapse the economy. So they know exactly what's going on. And the Ontario Security Commission knows exactly what's going on.

And when they busted home capital group, there were three people on the team that led the investigation in the fine, all those people were fired from the Ontario Security Commission after their home cap investigation. So everyone wants to cover it up. The problem is it's now an international thing in the U.S. is involved, and the money has gotten so big, and there is a war on terrorism, and there is mass immigration by troublemakers into Canada. The U.S. is well aware of it. So the question, the million dollar question is in this volatile time with the unpredictability of Trump, he can pull the trigger, pull the pin, do whatever whenever he wants, and the Canadian regulators will know exactly what's wrong and what's going on. So just even if you

boil it down, you take that guy, Ron Butler. You guys know him? Yeah. Yeah, he's he's somewhat outspoken. So him and Ben can talk about all the numbers, you know, the loan to value and house inventory for sale and markets now back, you know, in Vancouver, it's now back to where it was in 2014. You know, they can go through all the numbers. It's safe to assume a lot of these loans that were done in the last five to eight years are inside out, especially commercial loans, are inside out. So when loans get inside out, the proper reaction should be on bank financial statements is you write it down, or you mark it to market, or you do things to show the world the market has changed. You adjust things. There's been no adjustment. It's like business as usual.

There's no new loan loss creation. There's no hits to reserves. there's no $5 billion or $50 billion mortgage charge against stuff they know is not good. They just kick the can down the road. But Mark, isn't that like just financial markets in general? I mean, you're seeing private credit. Like, let's be honest, a lot of private credit funds are not being marked to market, private equity. To me, it just feels like that's the way that business is done.

You don't market to market until you're forced to. Well, my lot in life is to try to help people out on what issues are. You know, Guggenheim didn't have an issue. And Mark Walter didn't have an issue when he just bought the Dodgers, then just bought the Lakers. Well, all of a sudden now he's inside out, is broke and may go to prison. So there's no issues. There's never an issue till there's an issue.

And my thing is, ladies and gentlemen out there, this is what I think is an issue. If you want to agree with me, great, ignore me, great. Ben's not a dope. It just should be in discussion that we're in a very high risk flashing red time where the conduit may not be ASFI and it may not be Carney and it may not be Mourneau wherever he is or Shrimp de Jong. the catalyst could in fact be Trump or Besson. And the second they throw that pitch, that pitch isn't coming back. The second they throw that pitch

and get under the hood of the Canadian banks, that train's not coming back. It's the same, you know, it's a really good question you bring up. And I would just simply say, ladies and gentlemen, go look at a char to go easy. I mean, the people...

I was going to ask you if you knew about them, but I'm glad you to be. I'd known about Go Easy forever, right? I mean, there were people who wanted me to short Go Easy at $23. I think the stock went to $170.70. Everyone knew Go Easy was a scam. Everyone knew it was a scam. Ben knew it was a scam.

Everyone knew it. But that didn't stop the stock from going 30 to 150 or 170, whatever it went to, till the day where someone pulled the rug. And the day someone pulled the rug, you would have been better off not owning. it than owning it. And you would have been better off being warned than than not warned. I'm not the great Houdini here on when this happens, but between valuation, book, accident-proneness, macro currency, rates going to be going up or way up in Canada, and hostility with your southern border country, who's 25 times the size of you, I don't know. I mean, I think it's a time to be

either running for the hills or in the hills. I mean, I don't think it's a great time and have to put it on the field to wait until this thing plays out. Yeah. Is there so like, so like, I'm not a stock guy, right? I'm the real estate guy.

And I see this stuff very like, you know, it's pervasive in my industry. There's a lot of fraud for shelter. There's obviously money laundering and like, you know, a lot of these things happening. How dare you? That's on Canadian to say that. You know, you know, you have a.

problem when like realtors are the line of defense for FinTrack, right? Like to who filling that out. And I know they've made a lot of updates to that paperwork, but that to me like says we may not be as serious as we should be about, you know, getting the verifying the parties in the transaction. But if they fire this warning shot or like throw the pitch like you mentioned and then they don't like the investigation or whatever it is actually doesn't yield any results. Like doesn't that also like couldn't the banks just, no, they're not going to rally back to all time highs, but they're not, they may not trade at sustained low value. and regulators can do something about it,

or is that actually going to impact their business model in somewhere? Boys, listen, I got a hop. I'm sorry, I just popped on for a quick camera. You guys are good hands with Kohodes, but good to see you guys. Answer that question, Ben. Well, just in terms of what they can do, yeah, if they don't find it. If the U.S. force regulators hand, would it actually change the, like, banks, like, margins or profits or anything?

I don't know. Well, hold on. Okay, let's back up. Let's back up. you're assuming there's an investigation and that so most likely the banks will appeal to someone. I don't know the legality here, but the banks will appeal to somebody in the States. I don't know what that process would look like. If something comes down from Treasury, what is the recourse for a Canadian bank to appeal it? I don't know. So you're assuming they

have to prove their case. I don't know that that's true. And even if they did have to prove the case, you're talking about a multi-year court battle. So I wouldn't, I don't think that's the right way to think about it. If the Treasury in the U.S. wants to cause shit to create a bargaining chip for the administration, they absolutely can do it. And it just doesn't matter. At that point, like you're, you know, whether they get it over to turn. Yeah, the damage is already done. Yeah, absolutely. Absolutely. So I'm going to leave it at that boys. Good to see you guys all. Elbows up. We'll see you guys. Thank you, Mark Carney. Yeah. I think, I think what, what Mark mentioned about how this would actually change the public perception. I hadn't

thought about that before, but I'm curious to hear your takes them all about like, you know, if that warning shawl was fired, the perspective that people have towards, you know, fighting back in the trade war and the elbows up stuff and like trying to, you know, a stand up to the bully, that could shift pretty quickly. Like that actually might be the most material outcome. That will shift in a heartbeat. That sentiment will change overnight. And look, Ben put up that slide on the Iranian currency exchanges in the mall.

You don't think the Treasury Department knows of all that stuff? Of course they do. I send it to them. They talk to Sam Cooper. They're aware of all this stuff. You know, the question is, what's go? Okay, when does the whistle blow? In terms of when you say valuation, you know, Goldman Sachs used to trade at a fraction of book, as did J.P. Morgan for a very long time. Now the stocks are in favor and the stocks trade at big premiums to book. Deutsche Bank used to trade it 10 cents, used to trade 10% a book when things were an issue. The question is, the real question is there's three pivot points.

One, the businesses, if they were accounted for properly and regulated properly, the Canadian banks would be much lower because they'd have to mark to market all their bullshit. And they'd take huge charges against the book, reserves would go up, earnings would be cut in half, and the stocks would be much lower. That's one. how much financial crime is actually going on through the banks. Okay, that's speculation on all our part because we don't know. But at a minimum, you know, the slides of the Iranian currency exchanges,

you could say that's beyond questionable and who finances that. The TD case where the DOJ came down on them and they find them $3 billion of which TD paid, didn't even dispute it. Okay, they just paid it. and fired the CEO, that's $3 billion. So, well, the hardest part wasn't the $3 billion. It's the asset cap in the U.S. for TD. That's the biggest, that's the artist, no?

What, what, no problem, but they still wrote a check for $3 billion. Yeah. And, and it wasn't the Canadian regulator who popped them. It was the U.S. guy. And we also don't know what DOJ investigations are already going on about money going from terrorist operations into Canadian banks. So we don't know the details of anything that's ongoing but not public. We do know that the temperature between the U.S. and Canada is quite hot,

at least from a diplomatic standpoint, and the U.S. is embarrassed. You know, Lutnik is, and again, I'm not pals with any of these guys. I'm not pals with Lutnik. I can't stand them. I have respect. I sent in. I have respect for the Treasury guy. not a Trumper, never voted for him.

But at a minimum, the disrespect from Canada to the U.S. is very, very high. So that's another check where something can happen. So when you're in a dangerous, volatile, treacherous time, again, I'm not thinking about what happens if I'm thinking people, right, who own, these things should think twice and understand what you're really in and what the risks really are. Because in my, since 14, in my 12 years looking at Arctic Mexico, things have never been more fucked up than they are now. And we'll see how this all shakes out. Yeah. And I guess, Dan, just to add to your point in a bit like what Ben,

was saying in terms of the recourse for Canadian banks, I mean, I think a lot of people have trouble understanding or wrapping their heads around that, you know, the rules-based order is kind of thing of the past, right? Like, I think it's Ben Johnson or not Ben Johnson, but anyways, he mentions it in terms of it being more like Game of Thrones right now, where the old rules don't really apply. And I think that's where if there's any action taking against Canadian banks, I think, yeah, I think to your point, Mark, the Canadian government will probably be forced to react and then probably come to a deal with the U.S. And my question for you is, do you think a deal would include more access to the Canadian market for U.S. Bank? Because Trump has tweeted about that.

Not that they don't have access, but they're limited in terms of regulation for foreign banks. I think they can't take deposits under 150K, which basically limits you as a commercial bank if you want to do business here. I think it's all on the table. I think the Canadian banking regulator should be the FDIC. Asfi's clearly compromised. I mean, there's clearly issues up there. And the question is, how is it going to get dealt with? And I think this elbows up, be politically popular by hitching your wagon against anything Trump,

is probably one of the dumbest things known to man. It's, you know, you should be judged. on policy, not who you like or dislike. And I think it's a Pandora's box that can get opened. And once they get open, it becomes a whole different deal. Because if these Canadian banks were to have competition, and they weren't controlled by the Canadian government, and you put a Wells Fargo or JP Morgan or a Citibank up against these banks, Canadian banks profit margins that go through the floor. And if you really look at the books on all these bad real estate loans that are on the books, those would have to be mark to market. So there's a lot to me to say it simply. There's a lot that could go very wrong

for these banks. And there's very little incrementally that can go right. I mean, should they trade a three times book? Are these that grade of franchisees? I don't think so. And is the country that great? I don't think so. It's the worst on the GDP or GDP. of what, the group of 20 that has the absolute worst economic return. So it's not like I'm an anti-guy and I'm not and I'm not selling anything. I don't manage money. I don't charge anyone anything. I don't get paid.

It's just my, it's just my view. Would your view be different, like fraud aside? Would your view be different on Canadian banks if they traded super cheaply right now? Let's say one. in terms of book value 0.5? If the Canadian banks traded at half a book, which is where I think they should probably trade, I'd say the bank valuations reflect the huge amount of risk in the system.

I said if these things were trading at a big premium, it reflects no risk. I mean, valuation and risk should be paired off. The least amount of risk, you should have the highest valuation. The most amount of risk, you should have the lowest valuation. So there was a time where Goldman Sachs was hugely out of favor and the thing sold at a discount to book for a very, very, very long time. Now everyone likes Goldman Sachs and it trades at a premium to book. So if it was reflected in the bank's valuations, that would be one thing, but it's not.

And again, the currency at, what, 141? The currency is telling me an awful lot. when I started on this Canadian adventure, the Looney was 105 to the dollar. I remember. That was 20. It was 105 back in 2014-15, right? And so it's been since then of the leverage and the real estate and the money laundering

and the real estate speculation and the financial. It's been since that the Looney is now 141. And it's only 140. because of where oil is. If oil were to... Well, that's why... Yeah, to circle back, because when you started talking about currency again, to circle back to what you said earlier,

like, what's the case for oil going back to $60? Because, like, I don't feel like this, you know, like this oil problem is going to get solved anytime soon to the point where, like, I agree that we have a petro dollar and it's staying cropped up, but I don't know if that's a catalyst to crushing the currency valuation as much in the near term. Like, unless I don't, you know,

unless you're a view on a way, oil is different than mine. Well, I'm not a macro guy and Bitcoin oil. My opinion's good as anyone, but I'm not saying how it gets there, could get there, if there's some peaceful solution or some economic catastrophe or something like that. But oil has been all over the map for a number of years. There was a time where oil sold at a negative, negative $30 a barrel. I don't understand. understand how how that concept happened. And I sure didn't have it on my bingo card that oil would trade at negative $30 a barrel, but it did for some period of time. So I don't know. I know the wizards at the bank of Canada sold all their gold at 1100 an ounce. I mean, I just, I don't

have answers to it all. I mean, the main thing that, you know, the people listening, to us today or rabbit or whatever is, I think there's nine or 10 or 15 risk factors of how things could get unhinged quickly. And I don't, I can't see a scenario where anything incrementally good can happen to those banks to make the multiplier go higher. So that's, you know, that's, that's where I feel strongest in what I say. Yeah, I agree on the multiplier. I guess my thought is that If the government is successful in their bid to try and improve Canada's economy and diversified away from sort of the toxic, you know, asset mix that we had based our economy and GDP growth on in the past. And we do diversifying the resources and infrastructure, then there would be economic growth. And if they either maintain that existing multiple or grew into a more appropriate multiple, but with higher revenues, that would be probably the bullcase for Canadian banks that I would say.

The real estate side, I'll touch on quickly. And then I know Samal had a bit of a question on AI just before we get, you know, on the on a on the on on the on on the on the last tangent. But is that you know, the banks don't have a ton of exposure. I don't think on on on mortgages like CIBC you mentioned would probably have the highest one. And the, the, the, the lot of their mortgages predate like we did have the highest sales years ever in 2020 and 2021. So there are a lot of bad loans, right? But that doesn't, you know, most of their, the vast majority of their books is still deals that predated 20. before valuations got completely crazy. So, yeah, anything that originated in 2020 to 2022, 2023, if you were mark that down and they were at a 20% loan to value, those loans are probably negative equity right now. And they'll get renewed and whatever, and it'll all be fine. But all of, you know, the book of their business

that they've been building for the 20 years prior to that is still pretty secure in my lens, unless people have been topping up on debt and whatever. So that would be my one defense. And I'm not really bullish on Canadian banks and certainly not on Canadian housing, but that would be my one defense against that, the valuation of housing

not actually being a factor that could implode them. Simone, did you want to touch on the AI circular financing stuff before we go and we'll be mindful of your time here, Mark, and get you out of here in an hour. Yeah, I just was curious what your thoughts were, Mark, on, yeah, just what we're seeing in the AI space, the amount of debt being issued. I know you said you're not really a macro guy,

but the ripple effect that we're seeing in U.S. Treasury yields, too, even Kevin Warsh mentioning that, you know, that's one of the issues with higher yield is there's just so much that being issued specifically by the hyperscalers. Yeah, the Bank of Canada mentioning the exact same thing too on their previous meeting. Like, do you see any kind of danger in terms of potentially ahead in terms of the markets being in a bubble, all the interconnectedness? I know Dan and I have talked about, you know, some similarities to, prior to the GFC and some contagion risks.

I don't know if you have any concerns about that, if you've been following it, probably looking at it. You'd have to be living under Iraq. Yeah, I look, I mean, I lecture Columbia once a year in New York. And a year ago, I was there and I was just talking about the early signs of this AI debt bubble.

It reminds me a lot of Nortel, which was a Canadian. I'm from Ottawa. I'm in Ottawa, so I know Nortel pretty well. So it reminds me of the Nortel lucent vendor finance days, except this is on steroids. And the problem now is the debt is so big and these markets are so big. This AI has really been the crux of the U.S. economy, the spend on all this stuff, whether it's data centers or AI or buildouts or people getting wealth. That's really what's driven the U.S. economy.

It's not the consumer. I mean, the blue collar guy is dying. I mean, the guy who actually has to work for a living or husband and wife have to work or each work two jobs, those people are dying. But the money has been in this creating this fake wealth with AI. I mean, is it a bubble? Yeah, it's a bubble. It's a huge bubble.

But the problem was saying it's a bubble and when people hear it is, guys who weigh 350 pounds are morbidly obese, they're clearly unhealthy. Clearly they're going to drop dead. You just don't know when. I mean, they can live for another week, a year, a month, 10 years. And they can still get bigger. And they can get bigger and bigger and bigger. So, you know, I made my living over time.

I never short a bubble. I try to run away from bubbles or not have anything to do with it. Canadian housing was a bubble for a while and it went on probably for 10 years. So is AI a bubble? Of course it's a bubble. But just because it's a bubble doesn't mean it's bad or it's going to blow up right away. You just have to be conscious of it. You have to be conscious of fire danger. You have to be conscious of a hurricane in the Gulf when you live in the Gulf. You got to be conscious of black swan risks that are out there that can affect you. And therein lies the problem. And there's a lot of risk in the world.

And the question is you've got to price risk right. And if you price risk right, you should be all right. If you price risk wrong, you can lose a lot of money. So that's what I want to, you know, leave people with. You know, just think for yourself and try to think clearly and say, does this make sense? because, you know, my thing, if the U.S. you know, sort of goes like this, as it relates to tariff financing in Canada, the banks are going a lot lower, fast.

Are there areas of the market that you find attractive before we let you go? Because I know there are some areas of the market that look pretty, in terms of valuation. The only area of the market I like is U.S. cannabis, and I like Glasshouse brands based in California. because I think they're going to be able to sell it interstate and I think they're going to be able to export it. They grow product at $100 a pound

when everyone else is at $7 or $800. So I think they have a great business model and that's about the only thing that kind of sort of really turns me on. Everything else is sort of boring and other than you two. It's nice to keep it focused. It makes it a lot easier to win when you only got two things to manage.

Damn, damn right. Cool. Mark, I really appreciate your time today, man. I've always been interested in what you're doing, and I think that you have a very different perspective and excellent perspective on kind of some of the risks that are happening in Canada's economy. I guess we'll see whether or not this plays out the way that you expect. I'm curious. I mean, obviously as a Canadian, this would really suck, and I hope that it doesn't, and I hope that any of the issues that you've highlighted get resolved, you know, the way that we would want to see them as Canadians ahead of that.

as a result of, but I mean, even as a result of, I think like Ben mentioned, the damage would be done at that point. And that would be a really, really significant escalation. But I appreciate you putting it on our radar. And yeah, I mean, it's been a lot. Sounds good, guys. Thanks for reaching out. That was fun. Yeah. Our pleasure. Thanks, Mark. Yeah. Bye. The Canadian Investor podcast should not be construed as investment or financial advice. The host and guests featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.