Thursday, September 10, 2009

Obama Must Tame Finance at G-20 Summit: Here's How

By Ann Pettifor from the Huffington Post.
We, the authors of the Green New Deal have three proposals to put on the table.
  1. President Obama must address the 'catch me if you can' issue. Banks, like Citigroup, now have branches spanning 140 countries with approximately 16,000 offices worldwide. Such a global spread enables them to dodge taxes and hide gains in tax havens. Tax havens are the banks 'get out of regulation free' card. Whenever the administration or Congress threatens to regulate banks and other corporations: they respond with 'we'll go offshore.'

    Well let them. But if they do, the answer is simple: the American legal system -- paid for by American taxpayers -- is under no obligation to enforce their contracts written from dubious offshore locations through American courts. Especially when their whole purpose is to undermine the tax revenues that keeps the American legal system and its courts -- and the rest of America's public services -- in operation.

    So at Pittsburgh, President Obama should issue this edict: You can lend, dear bankers, from offshore -- but the risk is yours and yours alone. American courts will not uphold or enforce your contracts -- unless you follow the example of millions of Americans -- and pay your taxes.

  2. President Obama -- for the sake of his own presidency -- has to make American banks accountable. That is entirely possible. The Green New Deal promotes a new form of accounting called country-by-country reporting. It would make a bank own up to where it is operating, how much profit it makes in each country in which it operates and how much tax it pays there. It's crazy we can't find this out now -- but we can't. So if we are to hold these organisations accountable to American taxpayers -- who, after all, bailed them out -- then President Obama must propose and enforce this new form of accounting.

  3. There is the proposal put forward by Britain's top regulator -- Lord Adair Turner. This is for 'living wills' for banks -- or wind-down plans in case they fail. 'Living wills' would unravel the structural complexity banks use to minimise taxes and provide greater clarity in their legal structures.
President Roosevelt was 'magnificently right' when he challenged and faced down Big Finance at the World Economic Summit of 1933. Once he did, the world changed, and global economic recovery took hold. President Obama has the chance to emulate his achievement by taming Finance at the forthcoming G20 Summit, and by obliging the sector to step down from its lofty perch as master of the global economy, to once again become its servant.

Only then can we hope for real economic recovery.

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