By Richard Smith, a UK-based international bullshit arbitrageur
Over here
Standard Chartered might go to Hong Kong:
Standard Chartered considering its domicile options 17th September 2010
HSBC is all of a tizzy:
HSBC reveals plans to quit London for Hong Kong 5th March 2011
HSBC: Remaining in UK is preferred option 7th March 2011
Paris attempts to prise HSBC from London 5th April 2011
Barclays, meanwhile, feels the call of New York:
Will Barclays Turn Its Back on Britain? 30th March
..though they may have a disappointment coming, because…
Over there
In JPMorgan’s Dimon Warns of Regulatory ‘Nail’ in Coffin, 31st March 2011, Dimon informs us that actually, the US may be overregulated, too:
Regulators are negotiating international capital standards for the biggest banks but the chief executive of JP Morgan said setting the new requirements too high, or allowing overseas banks to calculate their asset base differently, could disadvantage US banks and was already stifling economic growth…Too large a disparity in capital requirements between Europe and the US would mean “you’re pretty much putting the nail in our coffin for big American banks,” he said.
And their clients will go overseas as as well:
Attacking another aspect of Dodd-Frank, Mr. Dimon said rules requiring companies to put up collateral as they trade derivatives would “damage America”. Gesturing at the chief executive of Caterpillar, Mr. Dimon predicted the industrial company would take its derivatives business to Singapore.
Meanwhile Greenspan, in Dodd-Frank fails to meet test of our times, 29th March 2011, thinks it’s even worse than that:
…concerns are growing that without immediate exemption from Dodd-Frank, a significant proportion of the foreign exchange derivatives market would leave the US.
To the bogeymen of Hong Kong, Singapore, Paris, Europe, Asia, not-the-US and not-London we can now add Canada:
…Many of the act’s rules on proprietary trading, for example, apply to US banks globally. But competing US offices of foreign institutions can readily switch proprietary transactions to European and Asian banks, and if time zones are relevant, to Canadian banks.
Poor old Barclays: perhaps there will be no one left to trade with in New York, by the time they get there.
For my part, I think all the banks should consider moving to Dublin. The Irish economy could do with a bit of help right now. The reasons for that might remind bankers why taxpayers are so lukewarm about hosting them.
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There is always the Moon.
The moon is too close. I think they should operate out of Abell 1835 IR1916, which is located about 13,230 million light-years away.
It is, naturally, no problem at all to locate at such a distance since they are after all, the masters of the universe.
I prefer within the event horizon of Cygnus X-1.
My guess is that they all end up on abandoned oil rigs outside of government control.
No problem – the navy always needs target practice.
I’m getting all choked up over these displays of selfless patriotism. It makes me want to tighten my belt and start to live within my means.
Standard Chartered and HSBC are already based out of HK for all intents and purposes. But if this means they will be less likely to come a-knocking for help should the Chinese economy deteriorate (and with it their primary source of income), Britain should encourage them to make the move.
Go ahead an move to China, and see how likely they are to bail you out. What exactly is their central bank rate, and how fast is inflation rising ? Also, say goodbye to the US discount window. Say hello to a government that may not tax you very much, but will execute you if you don’t tow the line. The published regulations in China are not very much, but “the party” may tell you to do something off the record, and you had better do what they want.
Also, you will lose influence over one of your largest markets : The USA. All of your campaign contributions will become “Chinese money”. This will become increasingly toxic to any politician, and may indeed create a backlash.
So, I say : go ahead and move to China. Don’t let
the doormy foot hit you in the rear on the way out.As obvious as the nose on your face. Put your boots on.
Don’t forget UBS who are threatening to leave Switzerland for the same reason. I’m not sure where they are planning to move to; London perhaps ;)
Remember when Beirut was a banking and finance capital?
Things change.
Maybe Seoul becomes the next haven.
Casablanca got too much heat when it was discovered gambling was going on.
great, love it.
Can we get JP Morgan to move to Pyongyang? Dimon could probably pick up some choice real estate for the new HQ on the cheap…
Oh, I think the real estate around Fukushima would be an even better deal. And given the banks’ embracing of risk, it might be a spot just hot enough to really fuel their ambitions at world dominance.
Or, if they were thinking a warmer venue, a bit farther from the coast, Mogadishu has low real estate rates — and nothing but ‘opportunity’ for the sort of reckless abandon and unfettered, unregulated capitalism the banks seek with such enthusiastic raptures.
After all, why should Pyongyang have a market(ing) advantage over coastal Japan and tropical Africa?
“I think the real estate around Fukushima would be an even better deal. And given the banks’ embracing of risk …”
Think of it as co-locating different varieties of toxic waste.
That thought had crossed my mind, actually.
And I’ve no doubt they’ll be whining for some kind of ‘co-location tax breaks’.
Cheeky bastards.
I think we all might get some chuckles out of their whinging, though ;-)
First, doesn’t Canada have relatively restrictive banking laws themselves? Second, shouldn’t be relatively easy to prevent national regulation arbitrage by even slightly preferencing domiciled corporations within superior Western legal system?
yes, much stricter regulations than in the US. just goes to show it’s a bogeyman threat to coerce requested concessions.
ah yes, the tired old diatribe of “talent” leaving for elsewhere.
I wish, o Lord how I wish, that someone would take them up on their “threat” (I view it as an offer).
it shows just how captured our govt is, that they take this crap. If I were president I would threaten to have JP Morgan’s banking license suspended if I even got wind that they were thinking of moving, or if I got wind that they were funding lobbyists trying to water down my regulations.
the banks exist at the mercy of the taxpayer, not the other way around. About time someone reminded them of it.
Let them move. The last thing they want is being forced to compete in the free market.
I’d love to see them “go Galt.” It’s been so long since I read “Atlas Shrugged” I don’t remember, who picked up the garbage in Galt’s Gulch?
‘If I were president I would threaten to have JP Morgan’s banking license suspended’
No-one capable of that sort of courage has gotten within a bull’s roar of the Presidency for over 40 years.
If the Fed were a publicly accountable body instead of the crony capitalist coven it is, threats like this could be met with suspension or expuilsion from primary dealership.
That would learn them pretty quicksmart.
The US could additionally start up the equivalent of the US postal service in the banking sector.
Offer non-serf producing products and force all the cry babies off shore. Good riddance to the corporate criminals and whiners.
The US actually had a Postal Savings System from 1911-1967. Customers deposited their money at the Post Office, which paid them 2% interest and guaranteed their money with the full faith and credit of the US.
(The Postal Service then invested it in local banks at 2.5% or higher. If the bank failed, the Postal Service lost money instead of the depositor.)
Before the FDIC was created in 1933, this was one of the few safe places for average American to deposit their money. It also helped immigrants familiar with postal savings banks in their countries of origin integrate into the American economy.
http://en.wikipedia.org/wiki/United_States_Postal_Savings_System
http://www.usps.com/postalhistory/_pdf/PostalSavingsSystem.pdf
thanks. good info at a good time.
or states can set up their own banks, like North Dakota has done:
http://en.wikipedia.org/wiki/Bank_of_North_Dakota
what I have read about the Bank of North Dakota is that it’s been a great success, and even our own Yves Smith has opined thusly:
http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=6239
…why wouldn’t we simply take away their offshore tax havens?..I know, every country wants every other country to give up theirs…
”
banks should consider moving to Dublin. The Irish
”
~~Ives~
Or Iceland? Monaco? Libya? A man-made island off the East-coast of Honshu? Built like Osaka Airport? Built to never sink? I think you are on the right track.
Let them sail over the horizon, never to be heard of again…
http://en.wikipedia.org/wiki/Seasteading
Let them go, and in their place let us build a bank of the people, by the people, for the people.
Credit Unions. Privately owned banks are stupid.
The issue should be who will take them? Given their propensity in the long run to saddle their domicile country with their losses.
In a rational world tax payers should be vetting who they issue residence to. I think the citizens of the Irish Republic and Iceland wish their banks had absconded years ago.
anybody out there in ireland or iceland?
let us know if you or your neighbors do wish this.
If they move, does that mean we don’t have to bail them out next time?
Yes, but they will still get bailed out by the Fed. The Fed bails out anyone (but average Americans, their small businesses, and their state and local governments). Even countries we are
at war withhaving “a kinetic military action” against can get bailed out. http://www.nypost.com/p/news/opinion/editorials/kinetic_military_action_is_still_m5xY8QTxTK35Y5VympnGbKhttp://www.rollingstone.com/politics/blogs/taibblog/why-is-the-fed-bailing-out-qaddafi-20110401
Perhaps the fed can move with the banks, to be close to them.
“Look, Ma, no hands!”
By all means, allow ALL the TBTF Banksters to leave! Provided:
1.) ALL their files are surrendered to the Federal Emergency Reconciliation & Arraignment Lodgement Secretariat (F.E.R.A.L.S.), to be headed by Elizabeth Warren, Bill Black, Brooksley Borne and Joseph Stiglitz;
2.) ALL their officers from middle-management above to be housed on Ellis Island (or Alcatraz, their choice) & ALL their passports to be surrendered. Tracker anklets mandatory:
3.) One TRILLION USD (in gold, silver, platinum or similar assets of REAL value) for EACH bank to be surrendered & held in escrow at Fort Knox;
4.) AMNESTY to be offered to all below middle-management staff in exchange for co-operation & testimony against 2.) above.
5.) Eric Holder, T. Geithner, B. Bernanke NOT invited.
I’m sure they’ll agree.
Just like we gave the Afghan Taliban $75 million after they destroyed those graven image, kouras in April 2001.
Hey banks: http://www.ehow.com/way_5297883_onenight-stand-etiquette.html
The banksters can relocate their business operations to Hell and take their clients and the Fed with them.
Are you suggesting they might not be doing god’s work?
Perhaps. But you never know, I could be a Satanist. After all, I did spend a good amount of my adult life working for the bottom feeding banksters.
To be honest, Hell is too pleasant a place for these scoundrels, I can envision it clear as day. Dante’s jaw gasping in the 9th level of Hell, at the sight of Llodd Blankfein devouring Satan.
Many years ago, when I was young and stupid, I had a verbally abusive girlfriend who kept me in line by constantly threatening to leave me.
Then one fine day I realized that yes, actually, this thing that you threaten me with— please, please do leave me. Now.
So yes, bankers, by all means leave: Your labor doesn’t add to the GDP. Your vacuuming of US Govt funds starves other more worthwhile projects. And your income is so undertaxed that you might as well be earning it somewhere else.
So, please, go.
We don’t need you.
Unfortunately, they are unlikely to leave even when we’ve broken up since they need us in order to fleece us.
Yes, please, please please go ‘Galt’ on us, all I ask is that you tell the folks at your grocery stores & restaurants that you used to be a banker and have now ‘gone Galt’.
I do not think many Real Bankers ever set foot in grocery stores.
What’s all the conversation, bankers? Get the hell out!
I sense a consensus here….so what are the chances of it happening?
I do wonder what the Fed’s relationship with Saudi Arabia is if they lend like they did to Libya. Isn’t the right posturing about Obama and world government and here we have “our” Fed which is seemingly really The Bank of The Rich.
I love the smell of derivatives in the morning. Smells like…blackmail.
“For my part, I think all the banks should consider moving to Dublin. The Irish economy could do with a bit of help right now. The reasons for that might remind bankers why taxpayers are so lukewarm about hosting them.”
What do you have against the Irish. First the IMF and EU hand down ultimatums – pay up or die – now some kindly blogger wants to dump toxic waste on their shores. Why not just bankrupt them, then pay them in corn for their labor and work them to death?
Richard, are you sure about sending them to Dublin? They’ve already done a pretty good job of wrecking the Irish economy . . .
Just what do these threatened moves mean? If Barclays moves to NY, does that mean that they can no longer turn to the UK Government for bailouts? Does it also mean that Barclays would no longer be able to create credit in British Pounds?
Could this be an opportunity to rid ourselves of some of the less desirable aspects of the Multi-National banks?
So when are they all leaving? Don’t let the door hit you in the ass on the way out.
A new country needs to be founded called Neo-Liberia that all corporations including banks can re-locate to. There’ll be no taxes and so no government to speak of so it will pretty much be like Somalia but at least everybody can be free to be as greedy as they want.
But everyone here is missing the point! Don’t you get it??? If the banks leave a country, they stop paying TAXES in that country! None of you seem to get that.
Wait… oh, yeah.
Nevermind.
Alas, US regulators might just give Walmart a banking charter. Just who were they protecting from what anyways? Walmarts been banking in Mexico for a bit and have not needed a bailout.
I here you can open a bank in Iceland as long as you have never been or never plan to be a commercial fisherman
I expect, unfortunately, that these Bankers all witnessed the unlovely sight of the New Zealand Govt. crapping its collective pants to the tune of NZ$30 million at the hint by Warner Bros. that it might take “The Hobbit” somewhere else.
“Putting the nail in our coffin” from Dimon. Priceless. I can hear the violin music now.
Disco LIves…cue Gloria Gaynor “I Will Survive”.
http://www.youtube.com/watch?v=Tth-8wA3PdY
…did you think I’d crumble, did you think I’d lay down and die?
Nina Simone – Dambala
http://www.youtube.com/watch?v=d84vMJBF5Yc
You slavers will know what its
Like to be a slave
Slave to your mind
Slave to your race
You won’t go to heaven
You won’t go to hell
You remain in your graves
With the stench and the smell
Sha does sing a mighty spell – may it keep on doing it’s work.
If JPM relocates to more regulatoryily favorable shores, then maybe there’s something to all this.
In the meantime, host country location doesn’t matter much when it comes to FED bailout access.
Dexia’s story is telling:
http://www.bloomberg.com/news/2011-04-06/fed-s-biggest-foreign-bank-bailout-kept-u-s-municipal-finance-on-track.html
It’s the second order casualties that drive the who gets bailed out decisions, (i.e Dexia bailed to save muni bond holders/MM accts, AIG foreign counterparties (soc gen,etc)bailed out to save US counterparties and the MM,… etc)
Barclays story is similar to Dexia’s and it was effectively treated by the FED as though it had already relocated, but that may have been rationalized as supporting the US Lehman bit.
Why bother moving house?
(BTW Nice job description Richard, How’s the pay in that industry?)
Not great, but at least it isn’t payment in kind…
They make a better door than they make a window….
Maybe we can get them all aboard the “Bob” and then scuttle her, then the banksters and Tony BP Hayward can get their lives back with old Davey Jones.
Excellent article… I will visit your site again for sure.