LONDON, Ont. - Canada's banking system is weathering the economic storm engulfing the global financial sector because of Liberal government policies he enacted more than a decade ago, former prime minister Jean Chretien said Thursday.

After receiving an honorary doctor of laws degree from the University of Western Ontario, the 74-year-old Chretien reminded his audience that he took a lot of flak for his position.

"People will remember how much hell I received in 1995 because I refused to let the banks merge," he said. "They said, `We need Canadian big banks who can compete with the world, so stop regulating the banks; we need the freedom of the market,"' Chretien told the graduation ceremony.

"Today in the turmoil, because we said no in 1995, you read any newspaper talking about stability, they all say the best stable banks in the world are in Canada today."

Chretien also told his appreciative audience how they can make a positive difference in the world, citing his refusal to allow Canada to take part in the U.S.-led war in Iraq while sending troops to Afghanistan.

However, he expressed dismay at the historically low turnout in the Oct. 14 federal election that failed to reach the 60 per cent mark.

"I was shocked," Chretien said.

"I heard from young people that many did not vote because they thought it would not matter. I told them, as I am telling you today, nothing can be further from the truth."

Chretien later turned on his characteristic charm when asked why he thought the Liberals were so soundly thrashed in the vote that saw Prime Minister Stephen Harper's Conservatives returned to power with a bulked-up minority.

The Liberals were reduced to 76 seats in last week's election -- down from 103 in 2006 -- and captured just 26.2 per cent of the popular vote.

"We didn't have enough votes to win," he joked.

Chretien, who led the Liberals to three majority governments, was philosophical about the loss, saying you win some, you lose some in a democracy.

He refused to criticize his successor Stephane Dion, who announced his resignation following the party's second-worst showing in more than a century.

"Mr. Dion ran a good campaign (but) he did not win. So he resigned. We'll do better next time."

He did note Dion was the minister who spearheaded enactment of the Clarity Act, which set strict referendum rules for Quebec's potential secession. The act cost Dion support in Quebec but Chretien said it helped reinforce Canadian unity.

The Liberals, like any other party on the losing end of a campaign, will need to reorganize, Chretien said, and will do better next time.

He also defended legislation he enacted that curbed corporate and union campaign contributions. Dion has complained he was unable to raise enough money to, among other things, fight off the Conservative onslaught of negative advertising directed at him.

"It was something needed at that time, I felt," Chretien said. "People have to adjust to it, and eventually they will adjust."

He said Harper's Conservatives, because of their roots in the Reform party, had been organized for years to build a war chest based on smaller donations.

"They had a grassroots organization under the Reform," Chretien said. "The Progressive Conservative party was raising money the same way as the Liberals. So, we were a bit slow at the gate for that but people will contribute."

The former prime minister said he would remain scrupulously neutral in the pending leadership race to replace Dion, whom he praised as a good cabinet minister.

Any advice he might have for the contenders will be given privately, he said.

Chretien, who finally stepped down four years ago, said he doesn't miss politics.

"Not really. I did it for 40 years and nine months. But I turned the page."