This is exactly the sort of interference with the private sector economy that is the hallmark of liberal government:
A proposed regulation could cost the U.S. banking system hundreds of billions of dollars, in turn costing our economy billions of dollars, and achieving no discernable benefits for banks, depositors, taxpayers, or the U.S. economy.
From The American, we learn that the Obama administration has proposed a regulation requiring all U.S. financial institutions to report to the IRS the interest paid to non-resident aliens on deposits they have in a U.S. bank account. Foreigners are not subject to U.S. income tax on interest they earn in the U.S. so what is the purpose of this regulation? There can’t be any legitimate purpose, that’s the thing. The only purpose Obama could have in mind is to help oppressive foreign governments whose overbearing grip on its citizens is why they want to park their money in the U.S. in the first place. It is estimated that U.S. banks are holding approximately $3.7 trillion in deposits from foreigners. This regulation will cause much of that capital to flee for several reasons, not the least of which is fear the U.S. government might cooperate with foreign dictators like Hugo Chavez seeking to confiscate the money of Venezuelan citizens.
The United States is a very popular place for foreigners to park their savings, for a variety of reasons: It offers a stable government that can be trusted to keep its hands off deposits—something that appeals greatly to residents of Venezuela, Argentina, Ecuador, and many other countries. Additionally, the United States offers a modern financial market; banks offer federally insured deposits, inflation rates have been low and stable for decades, and the odds are low (but certainly far from guaranteed) of another financial crisis on these shores (and well below the odds in most other countries).
All that foreign capital is loaned by banks to U.S. businesses that invest it new business and expansion of existing businesses, creating economic growth for the U.S. This growth to our economy would be lost if the regulation takes effect, and banks in Los Angeles and Miami, two banking centers with the strongest foreign ties, would lose massive amounts of deposits. Banks in these two cities have on average 41% of their deposits from foreigners. One bank’s foreign depositors account for 91% of its deposits.
Congress, both Republicans and Democrats, are attempting to pass legislation to prevent this unnecessary regulation from taking effect. Even Obama kool aid drinker Debbie Wasserman Shultz has criticized it.
Obama’s ability to think up new ways to kill the U.S. economy is amazing.