Bank Tax: Much work to do on bank tax: Treasury official
Members of the Group of 20 countries have much work to do on the details of a proposed tax on financial institutions ahead of the G20 leaders' meeting in Ontario, a U.S. Treasury official said on Tuesday.
Marisa Lago, assistant Treasury Secretary for international markets and development, told an audience of international bankers there was broad international support for the idea that taxpayers should not shoulder the burden of bailing out financial firms. She said there was also broad agreement that the largest financial institutions needed to internalize the cost of their risk-taking.
But individual G20 countries have more work to do, she said.
"There is a lot of work ahead before the G20 leaders' meeting later this month in Toronto to reach agreement on another level of detail on more granular principles for national bank levies," Lago said.
"It's a challenge that I believe can be met, but one that is going to require a lot of work because of the fact that countries around the world had to intervene in very different degrees and to different extents and some not at all as a result of the recent financial crisis."
Proposals for a tax on big banks designed to address the cost of bailing them out during the financial crisis have circulated in the United States and Britain but the idea foundered during last weekend's G20 finance ministers meeting in Busan, South Korea. The European Union said on Tuesday that it would continue trying to create a bank tax despite the setback in Busan.
Lago also told the meeting of the Institute of International Bankers the potential effects that higher capital requirements for banks could have on global growth were "front and center" on regulators' minds.
She also said the Treasury was keenly aware of the European debt crisis's impact on the U.S. economy.
"It would be hard to overstate the significance" of Europe's crisis for the United States, she said. "We recognize it's a global economy and what happens in Europe has ramifications for the U.S."
She added that not every proposed U.S. financial regulation would be repeated in regulatory reform proposals by other countries.
The 'Volcker rule' -- a move to separate banks' proprietary trading from trading on behalf of customers -- "is one of those instances where one doesn't expect that will be rolled out globally," Lago said.