Once revered for their freedom, entrepreneurship and credibility of the US dollar, American citizens are now becoming second class citizens in the eyes of the world. The restrictions set forth by the new US law, FATCA, are so repulsive to some foreign institutions that they have elected to simply stop doing business with Americans.

Several European banks have elected to no longer serve American securities investors due to stricter IRS reporting requirements.

-German financial institution HypoVereinsbank has informed its customers that it will no longer offer certain services to its US-based clients or to US citizens as of Jan. 1, 2012.
-Deutsche Bank cancelled accounts held by American citizens in the middle of 2011.
-Germany’s second largest bank, Commerzbank, is considering a similar move.
-Swiss bank, Credit Suisse also reported that it will no longer serve US investors.

Several large banks, including Credit Suisse, Barclays and the Canadian bank TD Bank have spent a great deal of money to fight the law. European Union officials have also sought changes to reduce the burden on European banks, to no avail. Banks say that the law is already resulting in significant costs and that compliance will ultimately be exorbitant.

“With FATCA, there is a cost on us in Europe but the benefits are in the US,” James Broderick, a senior manager with JP Morgan Asset Management, told Reuters in November, 2011. He says that some financial institutions face one-off costs of up to $100 million. “It would be easier to just write a check to the Internal Revenue Service.” An official for DWP Bank, which takes care of securities transactions for 1,600 banks in Germany, estimated that total cost of compliance in Germany alone could amount to 10 billion euros.

Many countries would have to revise their privacy laws to comply and there is no real benefit to them since U.S. banks do not seem inclined and are under no obligation to share the names and account numbers of foreign citizens hiding money in the U.S.A. 

Once the majority of foreign banks, insurance companies and financial institutions begin refusing Americans as clients and divesting in U.S. securities it will be too late to turn back.  Foreign investment in the U.S amounts to $21 trillion and $10.5 trillion of this is invested in US securities. A KPMG survey indicates that only 36% of financial institutions will comply with FATCA leaving 64% still considering divesting out of U.S. securities. If even a fraction of those foreign investors divest the loss to the U.S. would be in the trillions of dollars. This at a time when the U.S. economy desperately needs more foreign investment, not less.

There are 6 million U.S. citizens living abroad and they may not live on U.S. soil, but they still have the right to vote. Yes, every U.S. citizen wherever he or she is on this planet has the right to vote in the upcoming presidential election.  

2012 will be a close race and overseas Americans can make a difference and send a message.