On the surface, Lloyd’s Bank shutting down American’s bank accounts, and the transfer of the four Chinese Muslim Uighurs to Bermuda without so much as a “by your leave” to Britain, lacks any similarity, until of course, you read the fine print.
These two events have stemmed from two completely different policy stances by the current resident in the White House. First, closing Gitmo, and second, chasing down tax evaders, (excepting, of course, his cabinet. Can we fire congress and bambi yet?). Go here to catch up on what the British banks told Bambi to do back on May 25th, 2009.
Banking group drops American customers in UK ahead of costly proposals to stamp out tax evasion
Lloyd’s Banking Group is ditching American customers based in Britain pending a crackdown on international tax evasion planned by President Barack Obama.
This week American private client account-holders at Lloyd’s received letters informing them of an “important change in policy regarding clients who are resident, domiciled or linked to the United States by property or asset holdings”. They were told the bank had “no choice” but to “cease acting as your investment manager.”
One letter sent to Bank of Scotland’s portfolio management division, which is now part of Lloyd’s, said: “The USA has a mature regulatory environment governed by its Securities and Exchange Commission. These regulations mean that we are not licensed to manage portfolios for US clients.”
The letter added: “Unfortunately we cannot offer an equivalent service from within Lloyd’s Banking Group.” Clients have been advised to transfer their assets.
One recipient, who has lived in the UK for over 25 years, said: “After all this time, I’ve suddenly been told I must take my money elsewhere and I don’t understand why. Now I’m scared that other banks won’t take me on either.”
In its letters to clients, Lloyd’s has not referred to specific legislation. But last month, The Sunday Telegraph reported that British banks and stockbrokers were threatening to close down accounts held by American citizens due to concerns over new international tax proposals could make it too expensive for them to service the clients.
As I stated in my earlier post:
An American Resident telling private British Banks how to do business. Anybody see anything wrong with that? How about we tell the IRS to take a flying leap, and all of these little problems between allies will disappear?
Now for the second event; Bermuda.
The U.S. is accused of ‘riding roughshod’ over the UK by failing to consult on a deal to send former Guantanamo detainees to British colony Bermuda.
Are you ready for it?
Senior MP Mike Gapes, who chairs the influential Commons foreign affairs committee, suggested Washington may have offered to go ‘soft’ on the island’s tax haven status as a sweetener.
Downing Street also pointed the finger at the Bermudan government for apparently acting beyond its powers in unilaterally accepting the four Chinese Muslim Uighurs.
It has ordered an urgent security check and is considering what steps to take over the controversial transfer, which took place yesterday.
Mr Gapes, a Labour MP, said: ‘The U.S. is clearly determined to act in what it perceives as its own national interest even riding roughshod over what it should have done, which is spoken to the British Government.
The proper authority here is the British Government and the U.S. should have consulted with the Foreign and Commonwealth Office before they did anything of this kind,’ he told BBC Radio 4’s The World at One.
‘I wonder what promises have been given to the Bermudians, potentially about going a bit soft on the tax haven status or something else as a quid pro quo.’
Shadow foreign secretary William Hague said it was ‘astonishing’ that Downing Street knew nothing about the situation.
‘It is astonishing that an agreement of such significance between the U.S. and Bermuda, involving the resettlement of four former terrorist suspects to a British Overseas Territory, could have taken place without a ripple reaching Whitehall,’ he said.
And now it would appear there is a reason not to tell Britain about the transfer of the detainees to Bermuda. The Brits may have asked for the same tax haven approach for their banks, yes?
And it would appear that Barack Obama is creating a carrot and stick policy approach that only echoes, “do as I say, not as I do.” What happened to “the rule of law” when it applies to policy decisions from the “constitutional professor”?
I cannot wait to see the unveiling of the new financial regulation reforms being outlined on Wednesday.