Regulation On Nonresident Aliens Very Costly

And you thought this president was standing tall for the small guy, guess again. This is just one more screw up by the Obama team and believe there are many more that are already in place ready to bring down the country.

Hey Barack, your plan to "fundamentally" change the country is working. This is what we need more of so our future will be same as it is for the Sudanese.

The Costliest Regulation You've Never Heard Of
Source: Ike Brannon and Sam Batkins, "The Costliest Regulation You've Never Heard Of," The American, June 21, 2012.

One of the costliest regulations to come down the pike of late has nearly managed to escape detection. Earlier this year, the Treasury Department published its "Guidance on Reporting Interest Paid to Nonresident Aliens," which would require banks to report to the Internal Revenue Service the amount of interest they pay to nonresident aliens (NRAs) with a U.S. bank account, say Ike Brannon, director of economic policy, and Sam Batkins, director of regulatory policy, at the American Action Forum.

In assessing the economic consequences of such a regulation, department officials suggested that they would be negligible, pointing out that the regulation requires only minutes of work per NRA.

However, Jay Cochran, an economist at George Mason University, found in 2002 that NRAs respond to such reporting requirements by withdrawing deposits from American banks. Regulators failed to account for this phenomenon, and consequently underestimated the cost of their regulation.

•According to a 2011 Bureau of Economic Analysis report, over $3.7 trillion of the money invested in American banks is deposited by NRAs.
•When Cochran arrived at his conclusion, the bill under consideration would have imposed additional reporting requirements much less stringent than those being considered today.
•Nevertheless, he estimated that the new rules would result in capital flight of $100 billion.
•Given that the new requirements are significantly more pervasive than those in the original study, estimates of $200 billion to $300 billion in capital flight are realistic.

That NRAs would withdraw these enormous sums from American banks would eat directly into their profits by reducing the total loanable funds that they have at their disposal.

•Our fractional-reserve banking system means that one dollar of deposits supports multiple loans throughout the economy.
•So the withdrawal of $200 billion to $300 billion in deposits would result in a diminution of total loans in the economy of somewhere in the ballpark of $1.5 trillion to $2 trillion.
•This loss in loan activity would result in bank losses between $10 billion and $15 billion.
•Furthermore, these losses would be concentrated among a relatively small number of banks, particularly those in states with large populations of immigrants.