American Bank Lobbyists Freak Out About Financial Transactions Tax In Europe

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"American Bank Lobbyists Freak Out About Financial Transactions Tax In Europe"

Several European countries have announced their intention to implement a financial transactions tax — a small fee on stock trades meant to raise revenue and slow down some of the high-frequency trading that has come come to dominate world markets. Some U.S. lawmakers have proposed doing the same here, but the idea has gained little traction.

That, however, has not prevented U.S. banks from freaking out about the possibility that Europe will go it alone:

The U.S. financial industry is growing increasingly concerned that a European push to establish a tax on financial transactions could end up on American shores.

The group of investment and business lobbies warned Treasury Secretary Timothy Geithner on Tuesday that while they appreciated the Obama administration’s “sensible” opposition to such a tax, a growing movement in Europe to impose one could throw fragile markets off kilter. […]

The letter was signed by the Securities Industry and Financial Markets Association, the Financial Services Roundtable, the U.S. Chamber of Commerce and the Investment Company Institute.

A transactions tax, in addition to raising much needed revenue without causing economic damage, would throw some sand in the gears of high-frequency traders. Even one of high-speed trading’s pioneers has admitted that such activity does nothing for the economy: “We are competing at milliseconds,” he said. “And whether you can shave three milliseconds of an order, has absolutely no social value.” 52 financial industry experts, including several former executives at the nation’s biggest banks, said in a letter that a transactions tax “will rebalance financial markets away from a short-term trading mentality that has contributed to instability in our financial markets.”

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