FATCA is not the only bank regulation that will result in foreign capital fleeing the United States.
Barbara Schechter, Canadians blast U.S. Volcker rule, writes about how the new rules violate NAFTA:
“The Volcker compliance rules will affect the accumulation of securities [as a way] to ensure the activity is deemed to be market-making and not proprietary trading,” Mr. Russell said in an interview. In this scenario, “you can’t buy them as cheaply, you can’t sell them for as much, so the spread is going to widen,” he said.
The IIAC submission argues that the compliance rules amount to “an unprecedented reach of extraterritorial regulation” because Canadian firms with U.S. operations could be required to implement the reporting and record-keeping requirements wherever they operate.
Doesn’t that sound familiar?
I didn’t know about this one, so I had to read about this terminology here:
http://en.wikipedia.org/wiki/Proprietary_trading
http://en.wikipedia.org/wiki/Volcker_Rule
Interesting. This is almost parallel to the FACTA. How many times do I have to say this is ALL about control? I can understand what the US Gov is doing, but once again,it’s another case of using a sledgehammer to hit a needle. (I think this last sentence effectively the American personality – they go overboard on everything and they seem to over-regulate everything, even when there is no way to have effectively regulate a market.
Proprietary trading and market making will never go away. Is there a huge conflict of interest inherit to this? Yes. Should countries fight this? Yes. Knowing that this sort of behavior is very common in the financial world, perhaps investors should look for alternative asset classes. Will regulating help this? I seriously doubt it.
A great example of this worthless regulation is with the FOREX markets (foreign exchange). The FOREX market is unregulated throughout most of the word, but the the US applied regulation within the borders of the US with the Dodd-Frank act. For example, an American resident cannot open a forex account overseas. Most brokers say very clearly “We don’t open accounts for Americans”. (If they accepted American clients, they would be sued by the CFTC, which happened many times last year). There are severe restictions for American accounts like leverage (50:1), no hedging, FIFO. Moreover, the American consumer/trader really got the short end of the stick with too because of two more factors:
1- Since there was/is less competition, American brokers will not pay any rebate or incentive to trade. I think Dodd-Frank outlawed this. But what is wrong with receiving bonuses?
2- Even though they are “regulated” many American brokers, especially the largest, are plain garbage compared to some overseas brokers. They gouge prices, make unrealistic claims, and use any market movement to profit from customers’ losses. Like someone once said “American regulation focuses on the smallest 20% while they let the largest 80% do whatever they want to to do, even if it involves ripping off customers.”
Since the rest of the world doesn’t have these regulations, it can be said that the American trader is actually at a disadvantage to overseas traders. I also agree with this.
It also came to light later that “regulation” has taken another form, which is basically extorting more money from brokers, which ultimately gets passed on to the consumer. The “regulator” in America upped its fees and are now demanding even more money. No other regulator that I know of charges nearly as much. In my view, this is just another hypocracy which highlights corruption and conflicts of interest with US regulatory authorities.
I’m for broad-based common sense regulation, but NOT US-style micro-regulation and extortion.
great new article:
http://www.washingtontimes.com/news/2012/jan/4/tax-haven-wars/?utm_source=RSS_Feed&utm_medium=RSS
Thanks for that link. Washington Times is the less popular conservative paper in DC, and has been consistently more critical of FATCA.
Petros,
I think I have mentioned in the past, that getting reporting on FATCA into what is considered progressive media is important. ProPublica is a case in point. These guys do some good indepth investigative reporting, and if we could ever get their interest, it would escalate into the NPR, PBS, MSNBC world, as they are a news feeder organization. This commentary below is a case in point. It is about Volker rule, and how complexity of the regulations is killing it. I used it as an opening to try and get attention on FATCA. You might want to see how you too can leverage it
http://www.propublica.org/thetrade/item/how-to-kill-the-volcker-rule-just-add-fat
The other online source I continue to look for opportunities is Global Post… This is the last article that they have done that I can find.
http://www.globalpost.com/dispatch/news/regions/americas/canada/111003/american-canadians-wanted-by-irs-taxes%20
Just my opinion, but I don’t think I am wrong here, as I watch and hear it all the time as a faithful NPR / PBS listener … A story starts on Propublica or Global Post and then ends up with extensive coverage on NPR and PBS. We should be targeting those channels of media communication. Again, and I caution, no flaming rhetoric, as I find they do not respond well to that! LOL 🙂
Go for it. I am accused of having a libertarian bias; I’m probably not the best person.
Petros…
I don’t care much about what your bias is or even your political leanings. I just hope you would try to engage the progressive media in the US too, as your POV is important and you are articulate. (I have a lot of libertarian tendencies also, but not rigidly so to the point of certainty) Besides, your partisan views, if you have any, don’t matter in the US anymore, as you are not voting on the ridiculous choices the campaigns seem to come up with. Any comments you can make on a progressive media outside our bubble here, is good. Just my opinion, and I could be wrong.
@Just Me: Thanks my friend. I have my hands full with just this blog. I invite all our readers to do just as Just Me suggests. You are all the hands and feet of Isaac Brock.
There is a new article on the Volcker Rule over at Bloomberg. It appears there this whole mess has gotten quite dirty. Essentially the like of Goldman Sachs lobbied the Bernanke and the Fed to extend the rules extraterritorially to countries like Canada on the assumption that countries like Canada would throw a fit(as they have) and hopefully from the standpoint of Goldman Sachs and JPMorgan cause the entire Dodd Frank legislation to crash and burn. I have suspected this has been going on all along and in fact I was being paid a lot of money by Goldman Sachs to provide “advice” which I am not this is exactly the strategy I would suggest to bring down Dodd Frank and the Volcker Rule.
http://www.bloomberg.com/news/2012-02-23/banks-lobbied-to-widen-volcker-rule-before-inciting-foreigners-against-law.html
@Tim…
Thanks for that find.
@Petros, yes your hands and feet are full. What’s that cat of your doing? Can it blog? 🙂