They moved to Ontario during the Great Depression where Clarence worked as a salesman for several years before establishing a wholesale electronics business, C.M.

As parliamentary secretary to then justice minister Jean Chrétien, Peterson helped pass Criminal Code of Canada reforms that made it easier to prosecute sexual assault, allowed a victim's partner to be charged, and restricted the admissibility of a victim's sexual history in court, and ended the requirement that rape must be reported immediately as a requirement for charges to be laid.

[8] He supported John Turner's successful bid to succeed Trudeau in the 1984 Liberal leadership contest (for which his wife Heather served as campaign director) but lost his seat in the 1984 election.

When the Liberals returned to power under Jean Chrétien, Peterson served as the chair of the standing committee on Finance.

In 1997, Chrétien appointed him to the Ministry as the Secretary of State (International Financial Institutions), but Peterson was sent back to the backbench in 2002.

Peterson was mentioned as a potential interim leader of the Liberal Party of Canada,[12] following the resignation of Paul Martin; however, Bill Graham was named to the position.

Peterson did not take a critic's portfolio in the Liberal Party's Shadow Cabinet formed by Graham or by Martin's permanent successor, Stéphane Dion.