Vice President Joe Biden brought his fundraising muscle to Detroit yesterday to raise money for Democratic House members Gary Peters and Mark Schauer. During his remarks the Veep said that the economic crisis was caused by wild west tactics among the best and brightest on Wall Street.
“The rules were being made by the cowboys on Wall Street,” Biden is reported to have said according to Politico.
If so, where is the Sheriff? Twenty sheriffs met in Pittsburgh in September (read: G20) but they didn’t implement the financial transparency procedures needed to get the cowboys out of the salon and back on the ranch.
Maybe we need a new sheriff in town.
A smiling Urs Roth appeared on Bloomberg TV last week in a video version of whistling through the graveyard. Roth, who is CEO of the Swiss Banking Association, was in Washington to meet with the key people who will shepherd the country through the next iteration of banking regulation. With Swiss bank giant UBS recently coming out on the wrong end of a heavy weight bout with the Justice Department, Roth was no doubt trying to make nice with the people who could make his job a whole lot more difficult in the future.
Part of Roth’s p.r. campaign was to appear on Bloomberg television. He looked and sounded confident but what came out of his mouth was complete spin that belied the severe blow Swiss banking is taking after the recent tax evasion scandal. The essence of the interview can be distilled down to the following exchange:
Last week as the UBS settlement was announced and (metaphorically speaking) copious amounts of bourbon were drunk in panic at many of the 4,450 homes where U.S. account holders rest their heads (for now), a producer for a well known news program called to ask if I would appear to discuss the issue. After noting that I would, he wondered if I knew of anyone who might take a view opposite of mine. I gave the producer two leads but was told later that neither panned out and, since they could not provide a balanced view of the matter, my appearance would not be needed. Alas, had I only known about Holman W. Jenkins, Jr.
Mr. Jenkins is what I like to call a “UBS Denier” – someone who tries to explain away tax evasion by blaming it on high tax rates elsewhere. “Tax competition” is the phrase often employed for their cause. He appears to be of the view, much like this person, that paying taxes is not meant for everyone.
In today’s Wall St. Journal, Jenkins wrote a piece in which he said, essentially, that what UBS did wasn’t bad, they were just too obvious about it and got burned as a result. Specifically, he noted that, “UBS’s sin was trying to market Swiss secrecy cheaply and widely. . . .” He also offered his investment advice to would-be tax dodgers. Rather than investing with large and splashy UBS, he said, “the Swiss bank to trust . . . [is the] one whose assets and personnel are safely tucked behind Swiss mountains.”
Michelle Caruso-Cabrera is a CNBC anchor and a tax haven apologist. During her program yesterday she claimed that the agreement between the Justice Department and Swiss bank UBS, in which the identities of 4,450 American scofflaws holding UBS accounts will be provided to the IRS, “is a terrible thing.”
“Follow me here,” she pleads. Okay Michelle, convince me that pursuing cases in which Americans violated U.S. law is a bad thing.
When efforts are undertaken to change the state of play in a society, be it for voting rights, civil rights, banning landmines etc., at first blush the task looks daunting. The powers-that-be look too strong, too wealthy, too well-organized. Conventional “wisdom” can often be against the change makers. The effort, to be sure, is an [...]
Tuesday’s New York Times piece saying that the Justice Department would soon drop its case against UBS was later retracted after a department spokesperson said there “no basis for the report.” How could this be? Did reporter Lynnley Browning – a 15 year veteran of the ink trade – get it wrong? Was her original [...]
I read with interest the following from a Treasury Department release today:
“As part of the Obama Administration’s aggressive efforts to enforce U.S. tax laws and reduce offshore tax evasion, the U.S. Department of the Treasury today announced the conclusion of negotiations with Switzerland to amend the U.S.-Switzerland income tax treaty to provide for increased tax information exchange. Official signing of the protocol is expected in the next few months.”
The Swiss have finally agreed to do what they should have done years ago. As weak as that is.
The Guardian newspaper is running a story today that says the UK government will push G20 ministers (who meet in Berlin next week) to adopt a new standard of financial reporting by multinational corporations. Under the plan, called “country-by-country reporting,” multinationals will be required to report income and tax paid in every jurisdiction where they [...]
George Orwell’s futuristic novel about the dangers of totalitarianism and loss of personal freedom, Nineteen Eighty-Four, is also known for its additions to the English lexicon. “Big Brother” and “newspeak” are probably the most recognizable with newspeak meaning the use of language to obscure what was actually taking place. For instance, in the novel “minitrue” [...]
A Reuters piece on June 8 reported that many American clients of disgraced Swiss bank UBS are negotiating with the IRS to voluntarally disclose their holdings in order to avoid prosecution on tax evasion charges. The article noted that a Tampa-based attorney representing some of those clients said, as Reuters put, “a significant number . [...]
An op-ed in yesterday’s Financial Times calling for a single market for banking in Europe said what was needed is “a dedicated European Union-level resolution framework that can credibly discipline Europe’s large cross-border banks while offering depositors protection equivalent to national deposit guarantee schemes.” Sounds reasonable enough.
The article went on to say that the so-called “single passport” system, in order to reach it’s potential, “requires that the proposed EU-level supervisory authorities establish trust between home and host countries.” What the article did not mention is that this proposed system also requires enhanced know-your-customer rules that require the banks to collect beneficial ownership information on deposits by businesses, trusts and foundations.
The flow of illicit money, tax evasion, terrorist financing and a host of other global ills can be traced to the lack of information about the beneficial owners of those types of entities. Often located in some 70 secrecy jurisdictions around the world these entities can absorb, hide and transfer wealth outside the reach of any law enforcement agency. Their activities are largely unknown (and can be moved to other jurisdictions at a moment’s notice) and they frequently have no legitimate business purpose. Furthermore, beneficiaries of these activities often remain secret. In effect these entities operate in a world very much separate from the legitimate global economy.
Much has been written about the role sleepy alpine countries and palm tree-laden Caribbean islands play in the secretive world of tax evasion and money laundering. Those countries bristle when their names appear on lists of one sort or another or in media stories when the issue of shell corporations or illicit financial flows is discussed. So it is no surprise that those secrecy jurisdiction oppose any effort to remove the veil of opacity on their financial systems.
But it is surprising when opposition to increased transparency comes from other quarters. Take South Korea for example. According to a story in today’s Korea Herald only three of the 30 countries the OECD lists as being tax havens are recognized as such by the Korean government. Only Andorra, Liechtenstein and Monaco are given that designation. Liberia and the Marshall Islands were removed from the Korean list in 2006. The tremendous gains those countries made in transparency that year were perceived only by the Seoul government.
According to Rep. Cha Myung-jin of the ruling Grand National Party,
The yawning gap between the transparency rhetoric of companies and the reality of their actions ...
February 10, 2012
In his State of the Union address less than a month ago President Obama brought ...
February 10, 2012
When the G20 signed the Convention on Mutual Administrative Assistance in Tax Matters in November ...
February 9, 2012
About three years ago, the U.S. Internal Revenue Service (IRS) caught wind that Swiss bankers ...
February 8, 2012
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