EU-wide 'super regulator' poses threat to City of London

[BBRUN]

"The current financial crisis is no accident. It was not, as some top people in finance and politics now claim, impossible to predict. For lucid individuals the bell rang years ago. This crisis is a failure of poorly or unregulated markets, and shows us, once more, that the financial market is not capable of self-regulation," it said, calling for the a new "European Crisis Committee" to take the matter in hand.

http://tinyurl.com/3ktbcd

[KEE1213]

"I don't think it is bottoming," Liveris said, speaking during a Sanford C. Bernstein & Co. conference. "I think we're in for a tough '08 and, frankly, a tougher '09."

[JKL58]

Today the Secretary of the Treasury discussed the following points:

Point 1: International regulations are draconian with central banks now becoming the regulators to stabilize markets. Under the proposed new regulations the new regulators have the right and obligation to take over all types of banks and international investment banks when required without usual procedures.
Translation: This is it. The OTC derivative meltdown is far from over or under control. The history of central bank?s judgment of markets is probably the worst anywhere. In retrospect, central banks have always caused the bubbles and breaks.

Point 2: The Secretary sees economic activity in the Euro zone weakening.
Translation: ?Dear ECB: Please do not raise rates.? Good luck on that one.

Point 3: We are going through a rough patch in business.
Translation: It is going to get really bad out there. Put on a hard hat if you walk close to any building in which financial entities exist.

[CortShot]

WASHINGTON (CNN) -- The Internal Revenue Service is taking the unprecedented step of seeking Swiss bank records in search of what it suspects could be up to $20 billion worth of assets hidden by U.S. taxpayers.
The Justice Department is seeking Swiss bank accounts of Americans who may be hiding assets.

The Justice Department is seeking Swiss bank accounts of Americans who may be hiding assets.

Justice Department lawyers said late Monday that they had filed court documents in Miami, Florida, asking a judge to allow the IRS to get information from the banking giant UBS.

U.S. investigators are seeking permission for the first time to serve what are called "John Doe" summonses to obtain information about possible tax fraud against taxpayers whose identities are not known.

Information stemming from a guilty plea by a former UBS banker last week in Miami suggests the Zurich-based bank had "undeclared" accounts of U.S. taxpayers estimated at about $20 billion. Court documents indicate the IRS is interested in gaining information about taxpayer accounts at UBS during the years 2002 to 2007.

Deputy Assistant Attorney General John DiCicco said the U.S. government is trying to cooperate with the Swiss government and the bank. But he added, "We are prepared to seek enforcement if that process is not successful."
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U.S. tax laws require any accounts abroad worth more than $10,000 to be reported -- and penalties call for up to half of the amount in a hidden account to be forfeited.

A Justice Department official said government tax attorneys have no estimate how many taxpayers may be hiding funds.

"Offshore accounts harbor billions of dollars and people should take notice that the secrecy surrounding these deals is rapidly fading," IRS Commissioner Doug Shulman said in a written statement released through the Justice Department.

[Busy Bee]

Federal officials say they are preparing to propose a series of regulatory changes to enhance American competitiveness overseas, attract foreign investment and give American investors a broader selection of foreign stocks.

But critics say the changes appear to be a last-ditch push by appointees of President Bush to dilute securities rules passed after the collapse of Enron and other large companies — measures that were meant to forestall accounting gimmicks and corrupt practices that led to those corporate failures.

Legal experts, some regulators and Democratic lawmakers are concerned that the changes would put American investors at the mercy of overseas regulators who enforce weaker rules and may treat investment losses as a low priority.

Foreign regulators are beyond the reach of Congress, which oversees American securities regulation through confirmation proceedings, enforcement hearings and approval of the Securities and Exchange Commission’s budget.

The commission is preparing a timetable that will permit American companies to shift to the international rules, which are set by a foreign organization and give companies greater latitude in reporting earnings. Companies that have used both domestic and overseas rules have, on average, been able to report revenues and earnings that were 6 percent to 8 percent higher under the international standards, according to accounting experts.

Though foreign accounting standards are stronger in some ways than American accounting principles, they are weaker in some important areas. They enable companies, for example, to provide fewer details about mortgage-backed securities, derivatives and other financial instruments at the center of today’s housing crisis and that have troubled many Wall Street firms, including Bear Stearns.

The shift to international standards could also wind up eliminating the conflict-of-interest rules, adopted after the collapse of Arthur Andersen and Enron, that have limited auditors from performing both accounting work and consulting for the same client...http://tinyurl.com/6h76s2