Page 66 - Monocle Quarterly Journal Vol 1 Issue 1 Q4

BANKING
“It will become very di cult for banks to continue operating as truly private enterprises should the persistence of the state-led attacks on them continue unabated.”
most culpable for ensuring the quality of these toxic assets. ere has been very little to no repercussions for the lack of prudence taken by these agencies and for their part in the crisis.
Nevertheless, in spite of the asymmetry in the regulatory and legislative response to the crisis, one is still left with the question as to what the purpose is of bringing the entire banking industry to its knees. It will become very di cult for banks to continue operating as truly private enterprises should the persistence of the state-led attacks on them continue unabated. Perhaps there are two reasons, however, that this will continue.
Firstly, the US economy is currently an USD 18 trillion economy. Collecting almost USD 100 billion in nes from only four banks over four years is not an insigni cant boost to government tax receipts. e end game here may be to use bank nes to bolster the scus. e sheer size of these nes puts esh to this argument.
e second argument as to why the US would allow the erosion of one of their primary industries is far more pernicious. Banking, more so than any other industry, provides the keys to the kingdom. Were banks to become state-owned enterprises, or at least to become so highly regulated as to be equivalent from an investor’s perspective to a utility, then government would have far more control and insight into money ows, markets, consumers, taxable corporations, and private information in general.
is argument is not as far-fetched as it may seem. e United States Tax authorities have already used US banks to force banks in over one hundred countries to comply with the FATCA (Foreign Account Tax Compliance Act) legislation. is forces German banks, as an example, to withdraw 30 percent tax from US citizens accounts held with these foreign banks. And it forces these same German banks to expose private and con dential information to US banks, failure of which leads to cessation of trading with US banks.
Russian banks have been excluded from the global banking fraternity since the US led sanctions against Russia, following Putin’s invasion of the Crimea and Eastern Ukraine. ese sanctions were enabled by using US banks and by ordering them to close all trading positions with Russian banks. By ning banks in the United States heavily – and by continuing to oppress the idea of private enterprise and capitalism
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