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Blame Canada (World Edition)
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| jester |
| quote: | The world's top economies scrapped plans for a universal global bank tax on Saturday, giving countries plenty of wiggle room over how to make banks pay for their bailouts in future.
Finance ministers from the Group of 20 countries ended a two-day meeting to review progress on a string of initiatives agreed last year to make the financial system safer and protect taxpayers from having to pay for bank rescues again.
Attempts to introduce a global bank levy were finally ditched in the face of opposition from Japan, Canada and Brazil whose banks needed no public aid during the worst financial crisis since the 1930s.
"There is no agreement to proceed with an ex ante bank tax," said Finance Minister Jim Flaherty.
The G20 said it recognised there was a range of policy approaches and that it will approve a set of principles later this month in Toronto on how to protect taxpayers.
British Finance Minister George Osborne reiterated his pledge to introduce a U.K. bank tax regardless of what other countries do and will spell out his plans in a budget report on June 22.
"Different countries will do different things but to have it under the umbrella of the G20 is going to be helpful," Mr. Osborne told reporters.
Britain was forced to shore up the banking sector and rescue several individual firms.
The meeting did not agree any new regulation or alter deadlines for implementing steps agreed last year.
But ministers sought to keep plans for tough new Basel III bank capital and liquidity rules on course for implementation by the end of 2012 despite deep-seated concerns among several countries.
"We are on track to deliver the proposals at the Seoul summit in November. Ministers are fully engaged in finding the right compromises," Financial Stability Board Chairman, Mario Draghi, told reporters.
Several finance ministers signalled that a lengthy phase-in for Basel III beyond 2012 was now inevitable.
Mr. Draghi, who overseas implementation of the G20's financial reform pledges, said Basel was not expected to take full effect by that deadline.
"The key thing is to start the implementation in 2012. Then we will kind of find out what are the most appropriate transition times," Mr. Draghi said.
Banks warn that piling on tougher requirements too soon will force them to raise fresh capital at the expense of being able to lend to aid economic recovery.
Mr. Draghi said two percentage points of higher capital requirements would halve the probability of systemic risk.
Mr. Osborne said there was "some room for variation" over a tougher definition of bank capital but "everyone understands this is the absolute central part of creating a safer and better regulated global banking system."
The G20 also agreed to speed up introduction of measures to improve transparency, regulation and supervision of hedge funds, credit rating agencies, bank pay and off-exchange traded derivatives.
"We are also committed to improve the functioning and transparency of commodities markets," the G20 statement said.
Some policymakers have accused speculators of abusing commodities markets.
Mr. Draghi played down expectations that the G20 will usher in a slew of additional measures beyond what it agreed last year.
"We have a priority, it's to move forward on Basel III," Mr. Draghi said.
Despite the failure to make headway on a universal bank levy and slippage in full Basel III roll-out, policymakers noted that the United States is expected within weeks to approve the most sweeping reform of financial rules since the 1930s that will introduce the bulk of G20 reform pledges.
The European Union is also well advanced in adopting new rules on supervision and hedge funds, with a draft law on derivatives regulation due next month.
Elena Salgado, economy minister of EU president Spain said more EU regulation was needed for credit ratings agencies, which lacked transparency and accountability.
"To have a European credit ratings agency is another issue; perhaps it would be good, but it's something that cannot be done from one day to the next," Ms. Salgado told Reuters. |
(Courtesy of Thomas Reuters via. The Financial Post)
Got to love Canadian banks. Slowly but surely Canada will be numero uno. |
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| w_ashley |
Actually this whole this is deft due to Canadian "restrain" on megabanks. Canadian banks are forced to go international to "grow" outside the Canadian economy. Unlike the US Canada only has a handful of major banks like 3 or 4, as opposed to the many regional US banks. While this is ongoing american banks like CITI have expanded into Canada. While Canada's banking industry is said to be stable - they recently got around 50 Billion dollars of assets from the government in the form of asset purchases. While 50 billion is a small amount in the US budget - it is a very LARGE amount in the Canadian budget. Plus Banks are already taxed in Canada at atleast the corporate rate of I dunno 16% or 17%. Personally I find the idea of "bailing out" private banks by taxing them -to be a little anti capitalist and anti free enterprise.
Instead of taxing them why don't they just force, through financial and banking acts / legislation, banks to keep the assets that they are given rather than gamble with them? You know 100% funds availability. Without directed investment of said funds approved by the account who would put them into an Investment savings account for a set period. |
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| pmoisse |
| Australia's banks didn't need help either, did they? |
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| Zombie0729 |
| quote: | Originally posted by pmoisse
Australia's banks didn't need help either, did they? |
i've been 8yrs in banking now, the smaller country banks have no place in the global economy especially if their markets are tied to any non-traditional indexes. the banking industry is more global than ever and even things like credit unions that have government mandates for certain counties really will be lending on much smaller levels over the future (ie car loans, student loans, etc). The retail side of things isn't where the money is, it's simply a way to raise capital. IMO i thought the bailouts really spelled out how bad the "non-collateralized" banking system was but we still bailed them out so I guess no one cares. |
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| pmoisse |
| quote: | Originally posted by Zombie0729
i've been 8yrs in banking now, the smaller country banks have no place in the global economy especially if their markets are tied to any non-traditional indexes. the banking industry is more global than ever and even things like credit unions that have government mandates for certain counties really will be lending on much smaller levels over the future (ie car loans, student loans, etc). The retail side of things isn't where the money is, it's simply a way to raise capital. IMO i thought the bailouts really spelled out how bad the "non-collateralized" banking system was but we still bailed them out so I guess no one cares. |
Agreed, though isn't the problem that since everyone was trading these CDO's, the fact that the CDO's themselves are built out of worthless mortgages and other junk loans backed by collateral?
I'm not only talking about the US here. Within Europe the default on home mortgages is a real problem depending on the currency of said mortgage vs the currency that the mortgage holder gets paid in. These were all lumped together and then approved by the ratings houses to be grade AA quality debt and a sure win investment.
I think that if the major global banks want to gamble at the high-roller table, they should be forced to pay into an international pre-bailout fund since that's obviously what was needed after the last show |
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| Comrade Stalin |
| A bailout tax should be legislated and enacted on a country by country basis. Why should Canada, whose banks are well-regulated already, have to have their banks pay a tax for something they don't need. Because again, they regulate their banks to avoid this . |
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| Schadenfreude |
| quote: | Originally posted by Comrade Stalin
A bailout tax should be legislated and enacted on a country by country basis. Why should Canada, whose banks are well-regulated already, have to have their banks pay a tax for something they don't need. Because again, they regulate their banks to avoid this . |
ding ding ding. |
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| pmoisse |
| quote: | Originally posted by Comrade Stalin
A bailout tax should be legislated and enacted on a country by country basis. Why should Canada, whose banks are well-regulated already, have to have their banks pay a tax for something they don't need. Because again, they regulate their banks to avoid this . |
Agreed.
I have no objection to the country by country legislation, though I don't really have faith that all countries will enforce anything substantial |
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| zoogla |
| quote: | Originally posted by pmoisse
Australia's banks didn't need help either, did they? |
Yeah, I'm surprised India and Australia were not a part of the opposition. Due to the global interconnectivity, I don't see a problem in some support system, through $$$ or policy/consultative work to help the infrastructure of the countries where there isn't as much regulation. But the US will never regulate more so I guess it isn't fair for Canada & others to have to contribute to that. |
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| Schadenfreude |
| india smelled so bad that the bad economy was scared away.:p |
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| Lira |
Why the hell was Brazil against this? We dealt quite well with the crisis here but I don't see a reason why we'd be against some kind of back up. That being said, I don't see the point behind Stalin's argument either.
Enlighten me, economy-savvy TA's. |
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| Lilith |
| quote: | Originally posted by Lira
Why the hell was Brazil against this? We dealt quite well with the crisis here but I don't see a reason why we'd be against some kind of back up. That being said, I don't see the point behind Stalin's argument either.
Enlighten me, economy-savvy TA's. |
Brazil's reasoning was much the same as everyone else's who didn't need to do a bailout in 2007 of their banking industry, they already have strong regulation in place (that worked)
Its sort of a rhetorical reply of don't expect us to contribute to your inability to regulate your own financial sector to any measure of competency and then come here expecting us to pay for any further screw-ups. |
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