Monday, November 30, 2009

Offshore bankers hate living wills

From the FT:

"Regulators are keen to see living wills prepared for all systemically important financial groups, but the concept has split the banking world, with the more complex groups arguing that such documents will be almost impossible to draft without knowing the cause of any future crisis."

Living wills are procedures to simplify and streamline financial institutions so that they can be wound down quickly and efficiently if needs be. As we blogged earlier, quoting the FT again:

in the past few decades, the largest banks in the world have stealthily built corporate structures that are fiendishly complex, straddling numerous borders and plagued with offshore entities. Lehman Brothers was but one example of that. The pattern, of course, is no accident. After all, large investment banks excel in regulatory and tax arbitrage, and all that cross-border complexity and opacity enables them to exploit such loopholes with ease."

It is good to see that the "living wills" proposal has legs, and seems to be moving forwards. Although not overtly an anti tax haven initiative, the living wills proposal is, at the day's end, just that, though dressed up in different clothes. It won't be an easy ride to get a meaningful version of this proposal pushed through: just think of all that lobbying money and muscle bristling in the wings, ready to eviscerate and weaken such proposals as they emerge.


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