America First

Global crisis, global response: The slogan cooked up at the G-20 in autumn 2008 has taken off. The meeting in Toronto has sent a contradictory signal by giving its members a lot of liberty in their choice of methods to achieve a more stable financial world. In this context, the decision of the U.S. Congress to give up a banking tax designed to fund the financial regulation reform proposed by Barack Obama poses a problem.

From the American point of view, a banking tax doesn’t bring any visible response to systemic risk; rather it relieves proper fund conventions adapted in the function of risks. Europe is persuaded that the lever shift of the banking tax is equivalent to the bearing of the demands for capital, whose negotiations got bogged down by the Basel Committee. American finance has a short memory. Less than two years after having plunged the world into a gruesome crisis, it continues to excuse itself from international law in order to adopt a principally nationalistic style of regulation.

It’s not surprising that America remains imperial in the production norms that suit it. Already supremely favored by the U.S. GAAP accounting rules in the eyes of those established in Europe, American banks don’t feel any more affected by the limitation on bonuses for traders that Europe decided to impose starting in 2011. Make no mistake: Wall Street has no intention of giving up its comparative advantage and considers the increase of paperwork already imposed by Obama’s reform, as well as the Volcker rule — which insists on separating their trading activities from proper banking — punishment enough.

And now Europe asks if it should give priority to fairness by imposing rules and banking taxes on itself that haven’t been created yet, or give up the notion of a “level playing field.” The level of competition isn’t just and equitable.