P.M. BRIEFING : Fair Trade Banking Act Opposed

The Bush Administration today opposed proposed legislation to deny applications to banks from countries that restrict U.S. financial institutions operating abroad.

“The President has clearly stated his opposition to measures that might restrict the flow of capital or increase protectionism,” said David Mulford, undersecretary of the Treasury for international affairs.

“The market should be free to allocate resources,” Mulford said.

The Fair Trade in Financial Services Act of 1990 would permit American banking regulators to deny applications from foreign banking and securities concerns in countries that impose trade barriers against U.S. firms.

“The U.S. objection to even limited reciprocity is the risk that reciprocity would be used and retaliation would follow,” Mulford said. “The impact could be devastating to confidence in world financial markets and established patterns of monetary and capital flows.”