German Banks Discover
'Freedom' to Ditch their American Customers
"If some European banks are
now concluding that doing business with U.S. customers is no longer worthwhile,
it is entirely understandable. … For U.S. citizens, it is indeed a clear cut
case of discrimination. But it is one that emanates directly from their own
executive authorities."
Is the Internal Revenue Service trying to subborn foreign banks to do its dirty work? German banks have decided that complying with IRS rules for reporting on their U.S. customers isn't worth the trouble - so they are now refusing to service Americans.
Anyone who has ever opened a
securities account at a German bank may know: once in a while you're asked
whether you are domiciled in the United States or hold a green card. The number
of U.S. tax forms that local [German] institutions prepare for their clients is
staggering. In addition one could add to that the quarrels that European banks
have had with U.S. tax authorities for years. It's always a question of the American
Treasury wanting other nations to enforce U.S. claims against its own citizens.
If some European banks are
now concluding that doing business with U.S. customers is no longer worthwhile,
it is entirely understandable. The risk of suddenly finding oneself in the
cross-hairs of the U.S. tax authorities is too great, as some Swiss banks
recently have. Plus the returns are just too low, considering the
administrative burden of potential fines and other legal ramifications should there
be a failure to heed U.S. regulations.
It is therefore right for
European banks to separate themselves from these customers. For too long they fulfilled
one U.S. demand after another out of fear of the mighty United States. Now they
have rediscovered the freedom
of contract. Congratulations!
For U.S. citizens, it is
indeed a clear cut case of discrimination. But it is one that emanates directly
from their own executive authorities. For their exclusion is a reaction to
American attempts to turn foreign banks into agents of the U.S. tax
authorities. So address your grievances to the authorities sitting in
Washington - not Europe.
It is also clear that the
much-touted globalization of financial markets is anything but permanent. As
this ironic example shows, the United States may be digging its own grave.
