August 11, 2003
The Honorable John W. Snow
Secretary of the Treasury
Department of the Treasury
1500 Pennsylvania Avenue
Washington, D.C. 20220
Dear Secretary Snow:
On behalf of the U.S. Chamber of Commerce, the world's largest business federation, representing more than three million businesses and professional organizations of every size, sector and
region, I am writing to urge you to withdraw the proposed regulation (133254-02) that requires American banks to report the interest they pay on the deposits of nonresident aliens.
The proposed regulation, which would not improve the safety or soundness of the U.S. banking system, places an undue burden on banks.
The IRS estimates financial institutions would each spend approximately 500 man-hours annually on compliance and other stakeholders have argued the hours would be considerably higher. The waste of resources would reduce the profitability of U.S. banks.
Furthermore, failure to withdraw the regulations would lead to a reallocation of deposits out of the U.S. banking system thus reducing profits and decreasing credit flows to bank borrowers.
The reduced credit flows will fall disproportionately on small businesses, which rely on banks for funding.
In conclusion, we believe that there is little or no benefits to be gained by these proposed regulations and the resulting negative consequences of reduced profitability and credit
availability. Therefore, we urge you to withdraw this proposed regulation.
R. Bruce Josten
[Executive Vice President, Government Affairs]