A Matter of Trust

REVIEW SUMMARY
What. IRS wants banks to report interest paid to foreigners.
Issue. Proposed rule might drive capital offshore
Impact. Withdrawal of deposits limits lending capacity.

Florida banks' future ability to extend credit may be significantly hampered by a proposed Internal Revenue Service rule requiring U.S. banks to report interest earned on deposits of individuals from any foreign country, so-called nonresident aliens.

That's the position of Florida's entire congressional delegation, the state's Office of Financial Regulation, the chairman of the state senate's Banking and Insurance Committee, the American Bankers Association, and the Florida Bankers Association and its President and CEO Alex Sanchez. With the potential for as much as $15 billion in capital fleeing offshore from Florida by one estimate, it's very much on Sanchez's radar. He testified against the proposed rule in Washington, D.C. recently.