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It’s healthy for the government to be concerned about the strength of the country’s financial institutions, but to deal with that by encouraging the finance minister to involve himself with corporate strategy is the equivalent of “a political monkey wrench,” Mr. Poschmann said in an interview.

The government has always kept a close eye on the banking and insurance sectors and there have long been tight rules around areas such as ownership and how business gets conducted. But in the wake of the financial crisis the government has been boosting its oversight, under the guise of protecting the Canadian financial system from the sort of foreign contagion that caused so much carnage on Wall Street and in London.

The existing rules require banks to get approval for major acquisitions from the federal regulator, which makes decisions based on financial measures such as capital levels.

Under the proposed changes, which will need parliamentary approval, banks will need Mr. Flaherty’s blessing for all foreign acquisitions that increase total assets by 10% or more.

The Finance Ministry said in a statement the new rule is needed because of “additional risk factors” highlighted by the financial crisis that extend beyond the range of the regulator.

“Certainly, if one of the banks went belly-up, the government would have a problem on its hands,” said a senior Bay Street lawyer who has worked closely with the banks. “They’re worried because all the big banks are too big to fail.”