Are You Mad as Hell Yet?

Are you going to take this anymore?

Howard Beale is a fictional TV news anchor in the 1976 movie Network played by the late Peter Finch, who won a posthumous Oscar for his role.

In the movie, Beale struggles with depression and insanity, but his producers, rather than give him the medical help he needs, use him to get higher TV ratings. The image of Howard Beale, in a beige raincoat with his wet, gray hair plastered to his head, standing up during the middle of his newscast hollering,"I'm as mad as Hell, and I'm not going to take this anymore!" ranks as one of the most memorable scenes in film history.

Flash forward to June 2009.

Americans who have any sense of what is happening to this country under the current government might consider not just adopting Beale’s words as their credo, but, more importantly, acting upon them in constructive ways in order to change things -- and change things fast.

Before It's Too Late

What brought this to mind was an article from the London Daily Telegraph (6/13/09) sent to me by one of my blog readers.revealing that the venerable Lloyds Banking Group is ditching American customers because of another crackdown on offshore tax evasion by the U.S. Internal Revenue Service (IRS).

The article suggests the true reason for Lloyd's decision is the pending Levin anti-tax haven bill in the U.S. Congress and related IRS proposals backed by President Barack Obama.

Lloyd's American private client account-holders received letters informing them of an "important change in policy regarding clients who are resident, domiciled or linked to the United States by property or asset holdings". The bank claimed it had "no choice" but to "cease acting as your investment manager." Lloyd's logo is a prancing black horse, the rear end of which might be an appropriate new logo.

Lloyds Bank is a major U.K. financial institution whose origins go back to 1765. It has branches in 30 countries, including the U.S. (Will they close?) As a result of accepting U.K. government bailouts of billions of pounds sterling, the British government now owns a 43% share of the bank That uncomfortable situation might also have contributed to its anti-American client decision.

Anti-American Dumping

Why gives with Lloyds? In their letter the bank lamely claimed U.S. Securities and Exchange Commission rules were the reason. "These regulations mean that we are not licensed to manage portfolios for US clients." That excuse doesn't wash because there is no U.S. law preventing foreign banks form managing Americans' investments. Only open soliciting for investment business within the U.S. is banned.

In its "Dear John" letters to clients, Lloyds didn't refer to specific legislation. But published reports say that many British banks and stockbrokers were threatening to close down accounts held by American citizens due to concerns over new U.S. tax proposals that would make it too expensive for them to comply with.

These new rules are embodied in an expansion of the Qualified Intermediary rules thatI explained here in October 2008. Indeed, these Obama expanded QI rules seek to turn offshore bankers into spies for the IRS -- and punish them if they don't do as they're told.

Under Threat of Severance

Start with the established fact that President Obama and his rabidly anti-tax haven policy wonks really believe that almost any American who dares to engaged in offshore financial activity is a likely tax cheat. These folks have no qualms in trying to extend American power beyond our borders and into the tellers’ cages of other nations' banks.

Using the "Qualified Intermediary" system, under which the IRS decides which offshore banks are acceptable to them, foreign banks will be forced to disclose any and all information the IRS demands, under the implied threat of being cut off completely from the entire U.S. banking system.

In theory, QI's offshore banks will be required to report information on their U.S. customers to the same extent that domestic U.S. banks and financial intermediaries must-- on other words, to tell all.

The proposals, which were unveiled in President's Obama's trillion dollar deficit budget, are aimed at Americans with offshore accounts. U.K. bank officials say they are being asked to become collectors of U.S. taxes at a cost and legal liability that make servicing the U.S. clients more trouble than they're worth. 

Anti-American Trend

One American recipient, who has lived in the U.K. for over 25 years, said: "After all this time, I've suddenly been told I must take my money elsewhere and I don't understand why. Now I'm scared that other banks won't take me on either." He has a right to be upset.

Sadly, in dropping American clients, Lloyds is following in the nervous footsteps of other offshore banks that have dumped American clients, including the beleaguered Swiss giant, UBS and Credit Suisse, among others. In the UBS case, the bank paid a hefty fine of $780 million after admitting it systematically aided U.S. clients to evade taxes.

Unintended Consequences

I'll repeat what I said six week ago: Obama's radical political crusade against tax havens and Americans' offshore activity could produce unintended effects he and the IRS won't like.

There are many very important and useful paths of offshore financial activity Americans can pursue; much stronger asset protection, better investment possibilities, real, though now more tempered financial privacy, tax deferred life insurance and annuities, offshore residence and second citizenship -- all providing physical and geographic distance between Obama's tax police and your assets.

U.S. persons who have bank accounts or who are active in established offshore financial centers, such as Switzerland or Panama, or those planning future activity, probably wont suffer from Obama's and the IRS political attacks, as long as they follow the law. We can help you do exactly that.

And they are a good many reputable offshore banks which, unlike Lloyds, are willing to accept U.S. clients. We know who they are, we work with them on a direct basis and Sovereign Society members have access to those banks.

We don't need to be "mad as Hell" because our cool calculations offer you fully legal offshore solutions far removed from tax hungry Obamaland.

We Can Help

The general move toward greater scrutiny of tax havens undoubtedly will give pause to some, but it is unlikely to discourage those intelligent enough to understand and employ offshore's real advantages.

With our respected council of advisors, offshore professionals, books, special reports, newsletters and conferences, the Sovereign Society will keep you posted and tell you how to "go offshore" -- strictly within the ever changing law.

P.S. Need another reason to join The Sovereign Society? How about 58 of them…