Barack Obama has blamed the Bush administration's laissez-faire philosophy for allowing excessive risk and corruption at the highest echelons of finance, saying:
The American people are feeling frustrated that there's not a lot of adult supervision out there. We've been asleep at the switch.
Instead of people with disdain for regulation, I will ensure the regulatory authorities are led by people who are ready and willing to enforce the law.
Not just some of the regulatory agencies but some of the congressional committees have not been as aggressive as they should and we've had a White House that started with the premise deregulation was always good.
It is music to my ears. In a few sentences he has absolutely perfectly described the current regulatory environment, not just in New York, but also throughout the entire tax haven world.
Everyone ticks all the right boxes. But they have absolutely no intention at all of making sure that the regulation has any impact on the operation of markets. Nor is any meaningful fraud reported. And tax evasion continues almost unchecked.
And that is precisely because from the very top they were given a clear indication that they were free to do what they wanted, that ' financial innovation' to circumvent regulation was to be encouraged and tax evasion is a minor irritation compared to, for example, benefit fraud.
Unsurprisingly as a result of the IMF has declared that administrations are compliant with all regulatory requirements and yet a massive financial crisis exploded, completely unanticipated, and massive fraud is coming to light. Tax evasion continues unabated, in those very places such as the U.K.'s Crown Dependencies that declare themselves to be entirely compliant with all international regulatory obligations, to which they pay pure lip service, seeking wherever possible to in time to avoid the obligations that regulation imposes upon them. Just look at the contempt that Jersey and the Isle of Man showed for the EU's Code of Conduct on Business Taxation and you will see exactly what I mean.
This change of heart at the top is fundamental. The UK must embrace it, now. Regulation is good. It prevents harm. There has been massive harm. It follows that regulation failed. Two conclusions follow: the regulation was insufficient and the apparent compliance was an illusion. The required actions are clear: regulation must be reformed and compliance must be real. Tax havens will not survive in that environment. They only exist to undermine regulation. As such their raison d'?â„¢tre is contrary to the public good. They have no future.