Bankers Rally To Fight Us Treasury Change On Interest Reporting
Written by Victor Cruz on October 18, 2001
By Victor Cruz
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Armed with an economic study by a Coral Gables-based consulting firm, a delegation of Florida bankers is to visit Washington this week to oppose a US Treasury Department proposal for banks to report interest on non-resident alien deposits.
"The bottom line is that the implementation of this type of regulation could have major economic effects on the Florida economy," said Tony Villamil, chairman of the Council of Economic Advisers for Gov. Jeb Bush and president of Washington Economics Group, the firm that did the study.
Florida banks hold about $49 billion in non-resident alien deposits, Mr. Villamil said. According to the report, if the measure is approved, Florida could lose $18 billion to $34 billion in deposits.
If adopted, the ruling would not only force banks to report to the IRS interest earnings on non-resident alien accounts but that agency, in turn, would be authorized to give the information to foreign countries, said Tony Cardwell banking association counsel.
This ruling would "create a blanket, universal approach to monitoring resident-interest earnings, basically singling out non-resident aliens for disclosure," Mr. Villamil said.
He said the ruling isn’t needed because "know-your-customer procedures are already in place."
The fear is that non-resident aliens would simply take their money elsewhere rather than risk having information about them leaked to outside and potentially criminal parties, said Alex Sanchez, CEO of the Florida Bankers Association.
South American countries like Colombia, for example, are suffering from a rash of kidnappings, and any increased availability of information on non-resident deposits, say banking experts, could make non-resident aliens skittish about using US banks.
Banking officials fear that the ruling, if adopted, would make the US banking system less competitive. Banks in the Bahamas, for example, would become more attractive homes for deposits, Mr. Villamil said.
The resulting outflow of funds could seriously injure the rest of Florida’s economy, said Tony Dargan, bankers’ association president.
According to the report, Florida business-operating revenues could tumble $4.4 billion to $8.36 billion a year on average for 15 years. And during the year the ruling took effect, the state’s job losses could hit 62,000 to 188,000.
"The timing would be awful," Mr. Villamil said.
The Treasury Department is taking testimony on the matter, Mr. Sanchez said.
Local bankers who have signed on to fight the proposed ruling including Robert Brookes, president of Eagle National Bank.
Mr. Brookes said the proposal is an effort to catch false claims of non-residency by persons subject to taxes on interest accrued to deposits and to appease officials from some European countries clamoring for information on US accounts.
The proposed change, requested Jan. 17, was one of the last actions by the Clinton Administration with Secretary of the Treasury Lawrence Summers at the helm, said Tara Bradshaw, spokesperson for the department.
"While this report was assembled with data from Florida banks, in terms of the impacts of banking centers around the country, this is just the tip of the iceberg," Mr. Dargan said. "In terms of our ability to fund small business loans and construction loans to keep the economy growing, the impact could be quite severe." Top Front Page About Miami Today Put Your Message in Miami Today Contact Miami Today © Copyright 2001 Miami Today designed and produced by Green Dot Advertising and Marketing Solutions