Why Congress Should Forbid Cyprus-Style Expropriation of Bank Accounts


Glenn Reynolds of Instapundit gazes upon developments in Cyprus, where legislators came close to taxing bank deposits to foot the bill for an IMF bailout, and suggests:

an enterprising GOP member of the House or Senate would introduce a bill immediately to make such shenanigans illegal — and dare the Dems to oppose it….

[I]t is prudent to think of places to put your money where it will be harder for the looters to get at: Paying off debt, educating your kids, hard goods that you'll enjoy, etc. People in third-world kleptocracies tend to buy real estate in stable foreign countries, which is why so many Venezuelans now own condos in Miami. But it's not clear that this strategy is a winner for Americans.

The real concern is that when you get productive citizens thinking this way, you're already a step further down the road to a third-world psychology, which is not conducive to economic growth. Which is, I stress again, why enterprising GOP legislators should be pushing a non-confiscation law.

Read more here.

After Cypriot lawmakers voted down a proposal for taxing bank deposits, the situation in the European Union remains unclear.

I think Reynolds is on to something, though I'd be happy to see legislators of either party start talking up the sort of bill he proposes. For years now, there have been rumors that 401(k) and other supposedly sacrosanct retirement accounts will became game for governments low on funds. However well-based or not those fears are, anything the feds can do to draw clear lines and hem in their future behavior would be a good thing, for all the reasons Reynolds suggests. Massive levels of political and legislative uncertainty have reigned supreme in the 21st century and fear of the future is a great way to strangle it before it begins.