Democrats and Republicans alike on Capitol Hill say they want to toss out the concept of “too big to fail” in the financial regulation reform they are tussling over. That way if a financial firm is going to go under, it will go under, with no thought for a taxpayer handout.
By Neil Chatterjee
The U.S. has promised it will hunt down tax evaders.
And it seems tax evaders are on the run.
DBS bank, based in the growing offshore financial centre of
Singapore, told Reuters it had been approached by U.S. citizens
asking for its private banking services. But when told they would
have to sign U.S. tax declaration forms, the potential clients
Swiss banks also approached DBS on the hope they could
offload troublesome U.S. clients to a location that so far has
not been reached by the strong arms of Washington or Brussels.
DBS said no thanks. In fact many private banks and boutique
advisors now seem to be avoiding U.S. clients.
Will this spread to other nationalities, as governments
invest in tax spies and tax havens invest in white paint?
Is this the end of offshore private private banking?
Policitians are often scared to use the “R” word, because a recession makes them unpopular. Investment bankers dislike the “R” word too, but in this case it stands for regulation.
Regulation and lots of it is being cooked up in Washington and Brussels in response to the excessive risk-taking that helped bring on the credit crisis.
Credit derivatives are in the firing line as the bad guys of the credit crisis and derivatives in energy and commodities could get caught in the cross-fire.
Oil could also take a hit after rampant speculation was blamed for driving the price to a record of nearly $150 a barrel last year.
Although the quest to get rid of excesses is driven by good intentions, industry insiders say there will be unintended consequences and argue the regulators could have underestimated the difficulty of their task.
“It’s not easy to bring back the genie into the bottle,” Libya’s top oil official Shokri Ghanem told the Reuters Global Energy Summit.
As the president of the American Bankers Association, Edward Yingling has soaked up a lot of criticism of the nation’s bankers in the past year. He has also had to work many hours to fight to ensure that crisis measures by the government don’t cause long-term damage to his members. But the one thing he has had difficulty in coping with is the assault on banking as a profession and links made by politicians and the media between any financial institution that has problems and bankers. He told the Reuters Global Financial Regulation Summit on Tuesday he is angry about the “vilification of the banking industry” given that many bankers had nothing to do with creating the financial crisis. He said the word “bank” appeared in stories in which it didn’t belong. “AIG was not actually a bank,” he said.
But according to Sebastian Dovey, managing partner of wealth management consultancy Scorpio Partnership, they need to spend less time moaning about it and more time working with regulators to communicate the benefits of the industry.