T. Timothy Ryan, Jr. on FATCA

T. Timothy Ryan, Jr., President & CEO of SIFMA, files a written statement for the record to the U.S. House Financial Services Committee in response to the following question posed by Rep. Blaine Luetkemeyer (R-MO) during the committee’s hearing on June 16, 2011, regarding the “International Context of Financial Regulatory Reform” to Mr. Ryan: “What steps [do] you see that the Treasury Department needs to do to prevent the Foreign Account Tax Compliance Act (FATCA) from having a negative impact on U.S. capital markets.”

Among other things, Mr Ryan notes that the threat of imposition of U.S. withholding taxes on payments of all kinds to foreign financial institutions (FFIs) that are not in compliance with FATCA has led many such institutions to perform an analysis of the cost of FATCA versus their returns on holding U.S. securities and other U.S. investments. Therefore, to avoid potential disruption of the U.S. capital markets, it is vital that the U.S. Department of Treasury use the regulatory authority Congress provided it to develop rules that are narrowly targeted and cost effective. Failure achieve this objective could lead some capital market participants to leave the U.S. markets rather than face FATCA implementation costs or 30 percent withholding tax for failure to comply.

Read Mr. Ryan’s prepared written testimony and oral testimony for the June 16 hearing.