Bank to Uncle Sam: ‘Stick It Where the Sun Don’t Shine…’
by Simon Black: In
Case You Trip Over Your Shoelaces…
I never thought
Id see the day. Two years since the HIRE Act, FATCA, and Dodd-Frank
became law and threw global finance into a tailspin, two foreign
banks have finally stood up to Uncle Sam. Lets review briefly.
The HIRE Act
was originally drafted in the early days of the post-Lehman crisis.
Official unemployment (before they just stopped counting people)
was the highest in decades, and politicians had to do something
to get the economy moving.
what better way to boost the economy than to pass more laws? Its
up being a bunch of bizarre tax rules and pet infrastructure projects
the usual stuff. Of course, they have to pretend to pay for all
of this. So they invented FATCA, which stands for Foreign
Account Tax Compliance Act.
In short, FATCA
(1) All US
taxpayers must annually disclose foreign financial accounts to the
IRS if the values exceed a particular threshold (starting at $50,000).
This requirement began last year.
(2) All foreign
banks must enter into a blanket information sharing agreement with
the IRS. If they dont, the banks are subject to a 30% withholding
penalty on US-sourced funds.
the Dodd-Frank legislation
over 2,000 pages of unmitigated
economic destruction which makes it tremendously difficult for foreigners
to do business in the United States, or with US citizens.
The rules which
were proposed in Dodd-Frank are so obtusely complicated, nobody
can begin to understand them. Even the agencies which are responsible
for implementing Dodd-Frank have continually missed their own deadlines
because they dont understand the law.
its more reporting, more registration, more paperwork, more
foreign banks have been in turmoil over the last two years as a
result of all this legislation. Nobody wants to crawl in bed with
the US government, and some banks have taken action by shuttering
US citizens accounts. Americans are even being dumped from
foreign corporate boards.
Yet just yesterday,
DBS Bank in Singapore stood up to the US government, indicating
that they would not be registering with US authorities for at least
for one Dodd Frank provision pertaining to swaps. Nordea Bank in
Sweden made a similar statement.
This is an
interesting turn of events which could evidence a bigger trend.
the rest of the article
© 2012 Sovereign Man
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