Yes I know. An indirect reference to Ayn Rand will offend a number of my readers. Get over it.
FATCA is having the expected impact. (Expected, apparently, to everyone except Congress and the Department of Treasury).
HSBC Private Bank — in its branches outside the United States — will no longer take U.S. clients. This is not news. It has been true for a while in Hong Kong — people I know were rejected when they attempted to open new accounts at HSBC. HSBC is the first gigantic bank to have shrugged. It will not be the last.
I know — because I talk to people who are experiencing this — that other smaller banks all over the world are affirmatively kicking their US customers out. Not just private banks. Ordinary retail banks. Ordinary retail accounts — savings, demand deposit.
This is the law of unintended consequences writ large. HSBC will not suffer when it encapsulates its US operations under its US bank charter. The world is a very large place and HSBC will thrive by eliminating the overhead and complexity of dealing with the US government for matters and bank customers whose affairs will never touch the United States. US citizens have now become very expensive to banks in terms of the overhead required to keep the USA happy.
FATCA is a self-inflicted non-tariff trade barrier designed to deliberately harm the United States. Good work, Congress.
It brings to mind Robert Heinlein’s classic quote:
Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.
This is known as “bad luck.”
When — unexpectedly! — we start to see more foreign banks and foreign businesses pull away from the United States, perhaps our Congress will condemn the banks for their perfidy.
Oh. Want to see this happening on a purely domestic, non-bank/non-tax level? Take a look at “I’m just quitting”: A scene right out of “Atlas Shrugged” in Birmingham.