Steven, EXPERTS: ONLINE POKER “BY NO MEANS RELEVANT FOR MONEY LAUNDERING”, Calvin Ayre, a nonprofit gaming news website, http://calvinayre.com/2013/04/06/business/experts-online-poker-by-no-means-relevant-for-money-laundering/
Such hyperbolic views are easy to dismiss when they come from nutters like Kindt, but it’s less of a joke when politicians holding the reins of power start accepting Kindt’s kind of blarney as gospel truth. Last year, European Union politicians were told that online gambling was the “perfect tool” for money laundering. This February, the European Commission proposed putting further restrictions on online gambling to monitor transactions for suspicious activities, with penalties of up to €5m for companies that failed to comply with these directives.
With all due respect to the EU and the Financial Action Task Force, this is a solution in search of a problem. Members of the European Parliament (MEP) attended a workshop in Brussels last month at which Professor Friedrich Georg Schneider, an economist at the Johannes Kepler University of Linz, Austria,presented evidence that all gambling – land-based and online – accounted for a mere 0.5% of total money laundering activity. Schneider singled out online poker as a particularly ineffective method of laundering money, in no small partdue to the high transaction costs. Schneider quoted a study of the German gambling market by consultancy Goldmedia that concluded thateven if the entire online poker market was utilized solely for money laundering purposes,the total amount processedwould represent just 3.2% of the estimated total sum generated by all criminal activity in Germany. Schneider said his research had led him to conclude thatonline poker was “by no means relevant for money laundering.” At the same meeting, Sven Stiel, Director Northern Europe for PokerStars’ parent company Rational Group, stated that the relatively small sums involved in online poker transactions “have no relevance with regard to money laundering.” Stiel also noted that since online gamblingis a non-cash business, most of the moneythat flows into the site has already beenhandled (and presumablyvetted) by the banking system. When MEP Jürgen Creutzmann tried to throw Stiel by asking him about anonymous payment methods, Stiel noted that prepaid cards can only be loaded with minimal sums, usually a maximum of €100 to €150, and the use of these cards requires players to log in via their individual accounts, making them easily identifiable.
Their authors are hacks—1ac Paget is the McAfee white paper identified by this card
Stutz, 14 (“Report’s author says both sides misrepresent study on Web gambling, money laundering,” Las Vegas Review-Journal, 4/28/14, http://www.reviewjournal.com/business/casinos-gaming/report-s-author-says-both-sides-misrepresent-study-web-gambling-money //Red)
The author of a new report on the use of Internet gaming for money laundering activities said Monday the findings of the study have been misrepresented by both anti-online wagering activists and pro-Web gaming backers. The white paper— “Jackpot! Money Laundering Through Online Gambling” — was released last week by cyber security firm McAfee, which supplies Internet safety software for businesses and home computers. The paper immediately fueled heated rhetoric over its conclusions. “I feel like I kicked a hornets’ nest,” Raj Samani, chief technology officer of McAfee and lead author of the report, said in a phone interview from his offices in London. “Unfortunately, there has been some angry debate over the report. The reality is the most of (the discussions) are irrelevant to the findings.” Samani and his co-authors said online gaming was “the most prominent method” used by cybercriminals to launder money.McAfee highlighted six different efforts jurisdictions could take to halt the activity. “Greater collaboration between law enforcement agencies to target unlicensed gambling sites is required, particularly with those that operate outside the visible Internet,” the report stated. In an interview, Samani said cybercriminals will attempt to launder money through several means, with online gaming being a popular source. However, Samani said the small U.S.-based regulated Internet gaming operations “are just a drop of water in the ocean” when looking at the realm of the online wagering universe.Cybercriminals in the U.S., he said, look to unregulated websites in foreign jurisdictions, to launder money. “In any jurisdiction criminals can circumvent any obstacle used to block their access,” Samani said. “You put in regulations, the criminals will find another vehicle.” Samani said the report was written as a follow-up to a McAfee study on cyber crime that was produced a year ago. The findings were seized upon by both opponents and proponents of legalized Internet gaming in U.S. Three states — Nevada, New Jersey and Delaware — have laws that legalize forms of Internet wagering. Some 10 states are exploring the idea. Meanwhile, in Congress there two competing bills that would legalize and regulate Internet gaming and an opposing bill that would outlaw the activity. In a statement Monday, the Coalition to Stop Internet Gaming, which is funded by Las Vegas Sands Corp. Chairman Sheldon Adelson, said the McAfee report backed up previous warnings by the Federal Bureau of Investigation that Internet gambling will lead to money laundering by terrorists and other criminal groups. “In the world that proponents of Internet gambling want to impose on the rest of us, there will be 50 different laws regulating Internet gambling sites, and innocent Americans could find themselves gambling with dangerous criminals or terrorists and unknowingly help them move money,” the coalition said in a statement. Alison Harden, a spokeswoman for the Coalition for Consumer and Online Protection, which is funded by MGM Resorts International, Caesars Entertainment Corp, and the American Gaming Association, said the McAfee study showed banning Internet wagering would lead to additional unregulated websites. “(The authors) repeatedly argue that licensed sites provide more protection for Americans, and that unlicensed black market sites present the biggest concern for criminal activity,” Harden said in an emailed statement. “In fact, they say that, ‘requiring licenses for gambling operators is an important approach,’ in dealing with the problem.” Samani said he spoke with representatives of both sides of the issue after the report was released, but he refused to debate publicly with either party. “You can’t make an argument in 140 characters,” Samani said in reference to several Twitter feuds that were fueled by the report. “We didn’t have any skin in the game, so to speak. To be fair, we saw both sides of the story.”While Samani said regulated Internet gaming can help stem some of the illegal activity, the report said, “For every licensed online gambling site, there could be up to nine unlicensed online gambling sites.” Gaming Control Board Chairman A.G. Burnett read the report and said Monday he disagreed with one finding concerning money launderers using Bitcoin and other online currencies. “Nevada does not allow the use of crypto currencies when it comes to gaming,” Burnett said. He said Nevada addressed money laundering issues when the state drafted its online gaming regulations. “The standards created are as tough or tougher than the standards for land-based operators,” Burnett said. “We have minimized the risk by very rigorous auditing, accounting and enforcement standards.” Samani said money launderers are more likely to avoid American sites because of the small number of Internet locations.
Funding isn’t key—obstacles are target-specific and empirically insurmountable
Peter W. Singer 12, PhD in government from Harvard, is the director of the Center for 21st Century Security and Intelligence and a senior fellow in the Foreign Policy program at Brookings, November 2012, "The Cyber Terror Bogeyman," The Brookings Institute, http://www.brookings.edu/research/articles/2012/11/cyber-terror-singer
Zero. That is the number of peoplethat who been hurt or killed by cyber terrorism at the time this went to press.¶ In many ways, cyber terrorism is like the Discovery Channel’s “Shark Week,” when we obsess about shark attacks despite the fact that you are roughly 15,000 times more likely to be hurt or killed in an accident involving a toilet. But by looking at how terror groups actually use the Internet, rather than fixating on nightmare scenarios, we can properly prioritize and focus our efforts.¶ Part of the problem is the way we talk about the issue. The FBI defines cyber terrorism as a “premeditated, politically motivated attack against information, computer systems, computer programs and data which results in violence against non-combatant targets by subnational groups or clandestine agents.” A key word there is “violence,” yet many discussions sweep all sorts of nonviolent online mischief into the “terror” bin. Various reports lump together everything from Defense Secretary Leon Panetta’s recent statements that a terror group might launch a “digital Pearl Harbor” to Stuxnet-like sabotage (ahem, committed by state forces) to hacktivism, WikiLeaks and credit card fraud. As one congressional staffer put it, the way we use a term like cyber terrorism “has as much clarity as cybersecurity — that is, none at all.”¶ ¶ Another part of the problem is that we often mix up our fears with the actual state of affairs. Last year, Deputy Defense Secretary William Lynn, the Pentagon’s lead official for cybersecurity, spoke to the top experts in the field at the RSA Conference in San Francisco. “It is possible for a terrorist group to develop cyber-attack tools on their own or to buy them on the black market,” Lynn warned. “A couple dozen talented programmers wearing flip-flops and drinking Red Bull can do a lot of damage.”¶ ¶ The deputy defense secretary was conflating fear and reality, not just about what stimulant-drinking programmers are actually hired to do, but also what is needed to pull off an attack that causes meaningful violence. The requirements go well beyond finding top cyber experts. Taking down hydroelectric generators, or designing malware like Stuxnet that causes nuclear centrifuges to spin out of sequence doesn’t just require the skills and means to get into a computer system. It’s also knowing what to do once you are in. To cause true damage requires an understanding of the devices themselves and how they run, the engineering and physics behind the target.¶ ¶ The Stuxnet case, for example, involved not just cyber experts well beyond a few wearing flip-flops, but also experts in areas that ranged from intelligence and surveillance to nuclear physics to the engineering of a specific kind of Siemens-brand industrial equipment. It also required expensive tests, not only of the software, but on working versions of the target hardware as well.¶ ¶ As George R. Lucas Jr., a professor at the U.S. Naval Academy, put it, conducting a truly mass-scale action using cyber means “simply outstrips the intellectual, organizational and personnel capacities of even the most well-funded and well-organized terrorist organization, as well as those of even the most sophisticated international criminal enterprises.”¶ Lucas said the threat of cyber terrorism has been vastly overblown.¶ “To be blunt, neither the 14-year-old hacker in your next-door neighbor’s upstairs bedroom, nor the two- or three-person al-Qaida cell holed up in some apartment in Hamburg are going to bring down the Glen Canyon and Hoover dams,” he said.
Banks aren’t bothered by the UIGEA in the squo
Edelman January 6, 2015 (Marc [professor of Law at the City University of New York’s Baruch College, Zicklin School of Business, where he published “A Short Treatise on Fantasy Sports and the Law.” He also is an attorney and consultant for numerous companies in the sports, online gaming, and social media industries]; Why Are Credit Card Companies Such As Visa And MasterCard No Longer Afraid Of U.S. Gambling Laws?; www.forbes.com/sites/marcedelman/2015/01/06/why-are-credit-card-companies-such-as-visa-and-mastercard-no-longer-afraid-of-u-s-gambling-laws/2/; kdf)
When the Unlawful Internet Gambling Enforcement Act (“UIGEA”) was signed into law in October 2006, legal experts predicted the act would scare away credit card companies from funding businesses that could arguably be construed as illegal sports gambling. The prevailing theory, at the time, was that even if U.S. laws could not deter entrepreneurs from entering into risky online gaming markets, U.S. laws could certainly deter prudent and stodgy credit card companies such as Visa V +1.31% and MasterCard MA +1.32% from funding these gaming ventures. At first, the UIGEA seemed to work. But over time, the UIGEA’s impact has been far more limited than what Congress may have expected. Today, few, if any, payment processing companies seem to be truly afraid of the UIGEA.Only eBay EBAY +2.57%, which operates the payment processing company PayPal, takes the threat of government action at all seriously. Indeed, most U.S. credit card companies today are willing to finance just about any form of online gaming so long as the company providing the contests obtains an opinion letter from a lawyer stipulating to the game’s legality. Today, both Visa and MasterCard fund the online contest TradeSports even though the contest pays winnings based on participants’ ability to predict game-events that are based on just a single real-world sporting event. Similarly, all four major credit card companies — Visa, MasterCard, American Express AXP +1.24%, and Diner’s Club — provide payment processing to HotRoster: an online contest that allows participants to bet on the results against the house in one-on-one player match-ups. Visa logo from 2015 Visa is one of the several large credit card companies that is processing payments for innovative but ‘gray area’ online sports contests. It is not surprising that companies such as TradeSports and HotRoster seem to have been able to obtain legal opinion letters favorable to their games. Based on the pure quantity of lawyers in the United States (over 1.2 million to be exact), entrepreneurs in the online gaming space can cherry pick their lawyers, hiring whoever is willing to write a favorable letter for them — irrespective of whether the chosen draftsman is even the day-to-day lawyer advising these businesses. Far more surprising, however, is how easily credit card companies seem to have accepted opinion letters from some of the riskier online games. Of course, the longer that credit card companies such as Visa and MasterCard go without facing a legal challenge for funding questionably legal online games, the more confident these credit card companies will become that their current business practices are legally safe.
Banks are fine now
AP 14 (http://www.foxnews.com/us/2014/07/05/5-reasons-why-us-economy-is-recovering/)
STRONGER BANKS The United States moved faster than Europe to restore its banks' health after the financial crisis of 2008-2009. The U.S. government bailed out the financial system and subjected big banks to stress tests in 2009 to reveal their financial strength. By showing the banks to be surprisingly healthy, the stress tests helped restore confidence in the U.S. financial system. Banks gradually started lending again. European banks are only now undergoing stress tests, and the results won't be out until fall. In the meantime, Europe's banks lack confidence. They fear that other banks are holding too many bad loans and that Europe is vulnerable to another crisis. So they aren't lending much. In the United States, overall bank lending is up nearly 4 percentin the past year. Lending to business has jumped 10 percent. In the eurozone, lending has dropped 3.7 percent overall, according to figures from the Institute of International Finance. Lending to business is off 2.5 percent. (The U.S. figures are for the year ending in mid-June; the European figures are from May.)
They make it worse—repealing regs just means banks are caught sleeping when onerous ones inevitably come
Kramer 2015 (Edward [Executive Vice President of Regulatory Affairs, Wolters Kluwer Financial Services]; 2015 Banking Regulatory Outlook]; Jan 7; www.banktech.com/compliance/2015-banking-regulatory-outlook/d/d-id/1318508?page_number=3; kdf)
We will continue to see heightened regulatory focuson a number of fronts in 2015, ranging from increased scrutiny around mortgage-servicing rules and bank examinations, to the introduction of new HMDA data-collection requirements, to efforts to tamp down on discriminatory pricing in the indirect lending market, to the use of proxy methodology in adjudicating banks’ lending practices. Disparate impact is under review and being challenged in the courts. Cyber security will continue to be a contentious issue as banks contend that ultimate responsibility should rest with those companies where breaches occurred, rather than banks bearing the burden. The public comment period around the CFPB’s new Home Mortgage Disclosure Act data collection requirements ended in late October 2014. Although 2015 will bring promulgation of the new rules, we don’t yet know the details or the amount of time banks have to prepare before requirements go into effect. What we do know is that the extent and breadth of additional data collection fields required will be significant, imposing added challenges on banks. Regarding bank examinations, we anticipate heightened regulatory scrutiny with increased attention on the role a bank’s board of directors plays in overseeing compliance. Increasingly, examiners are monitoring to ensure that boards are fully involved, not only in the establishment, but also in the oversight of an organization’s compliance programs. For many the answer lies in automated compliance-management systems that deliver consistency, centralization, and visibility to compliance efforts, benefits that are as fully realized at the board level as they are by bank compliance officers. Heightened emphasis on mortgage servicing and sub-servicing rules will continue -- the CFPB has been very demonstrative about its intent in this area. During 2015 we can expect continued changes in mortgage-servicing rules that will include new protections for surviving family members and other homeowners. Regulation in this area is an evolutionary process. Non-bank mortgage servicers are bracing for an onslaught of new capital recommendations from the Conference of State Bank Supervisors that could go beyond servicing to impact originations. From the challenges of implementing the new TILA-RESPA disclosure rules to capturing new HMDA data requirements, growing compliance burdens will put new, additional pressures on banks’ operations and systems. The reality is that financial institutions today cannot adequately monitor, track, and report to regulators on their lending activities without sophisticated technological systems. Only a few years ago, the compliance officer was on the hot seat when examination findings found gaps or other problems with a bank’s activities. Today, the chief information officer is every bit as accountable to and involved in ensuring the integrity and comprehensiveness of a bank’s array of lending programs. Either you must build the technology competency in-house to meet today’s regulatory requirements, or hire vendors or consultants to do it on behalf of your organization. Given the Aug. 1, 2015, deadline for TILA-RESPA compliance, not only should you have a game plan at this point, but you should be well down the track in working with your in-house teams and vendors/consultants to implement the changes necessary to ensure readiness. We recommend that banks test their systems no later than May 1 to ensure readiness for the August deadline. Finally, we encourage banks to build a thoughtful and comprehensive compliance strategy for 2015. The old mantra “an ounce of prevention …” will be fully relevant, as non-compliance increasingly is leading to severe monetary consequences that range from fines and penalties to harsh reputational and regulatory consequences.
This advantage is false
Kelly 9 (Joseph, Ph.D., J.D., co-editor-in-chief of Gaming Law Review and Economics, is a professor of business law at SUNY College Buffalo in New York and an associate of Catania Con- sulting in Halcedon, N.J, Financial Transaction Providers Needn’t Worry Too Much about Complying with UIGEA Rules, GAMING LAW REVIEW AND ECONOMICS Volume 13, Number 3)
Concerning an established commercial customer, the burden on the financial transaction provider is very light—“a simple notice” sent to the customer that “restricted transactions are prohibited from being processed through the account or relationship.” Should the financial transaction provider have actual knowledge that the existing customer is engaged in an Internet gambling business, it should conduct due diligence procedures similar to that of a new customer.54 If the transaction is cross-border, the agencies considered but rejected a “requirement that the foreign counterparty have reasonably designed policies and procedures in place to ensure that the commercial relationship would not be used to process restricted transactions.”55 There is also no requirement “to conduct due diligence on its foreign respondent’s commercial customers.”56 Should the U.S. participant be informed by the U.S. government that the foreign customer has processed illegal gambling transactions, then it should send a notice to the foreign customer pursuant to Appendix A to the regulations.57
Financial transaction providers must also establish a compliance program to monitor commercial transactions. Remedial action is required only if the financial transaction provider has “actual knowledge” of a restricted transaction “that is known or brought to the attention of compliance personnel of the participant responsible for that transaction or customer (which may be below officer level) or any officer of the participant.”58 This actual knowledge requirement is less of a burden than the “should have known” or “reason to know” requirements to establish mere negligence.
The regulations do not mandate specific remedial action, and defer to the “business judgment” of the financial transaction provider.59 One alternative might be to “block” a prohibited transaction. The rules define blocking as rejecting but not “freezing or otherwise prohibiting subsequent transfers ... ”60 Another alternative might be to utilize business judgment either to deny a commercial customer access to a payment system or close the account for processing a restricted transaction.61 The rules provide the financial transaction provider protection from liability, as long as the termination or response is based on a reasonable belief that the transaction is restricted.62 There is no liability if the financial transaction provider chooses for business reasons to refuse all online gambling transactions.63
The regulations also exempt many of the designated payment systems, such as automated clearing houses, check collection systems, and wire transfer systems, unless they have a “customer relationship with the Internet gambling business,”64 which is extremely unlikely, or in certain other limited circumstances. Money transmitting businesses are exempt unless they permit transmission of funds “remotely other than a physical office of the money transmitting business.”65 Thus, money transmitting businesses, such as check cashiers and currency ex- changes, could be included only if they transmit funds by remote means.66 Credit card companies probably block all gambling pursuant to utilization of the Merchant Code 7995. They might now create a new code for legal online gambling.67
The regulations stress that policies to prevent restricted transactions are with respect to commercial customers only.68 The American Bankers Association summarized the responsibility to the individual customer: “In other words, if your customer is the gambler, you do not have to block gambling transactions except for debit and credit card transactions. In those cases, you may rely on the network policies and procedures and merchant codes.”69
WHAT DOES THIS MEAN FOR LAWYERS AND FINANCIAL TRANSACTION PROVIDERS?
The impact of UIGEA and the final rule, except for recordkeeping, should be minimal. The agencies note “that most Internet gambling businesses that use card systems for funding do so through non-U.S. merchant acquirers that are not subject to the Act or the Final Rule . . . .”70 Gaming lawyers, however, may rejoice at the prospect of drafting numerous “reasoned legal opinions” on what Internet gam- bling is either lawful or unlawful. The agencies also estimate that the recordkeeping burden for regulated entities should be approximately one million hours.71 Should the DOJ initiate prosecution of a financial transaction provider, it may utilize UIGEA as the last count in a laundry list in a criminal proceeding.
Framing issue—all of this is industry chicanery
Admati 2013 (Anat R [George G.C. Parker Professor of Finance and Economics, Graduate School of Business, Stanford University]; TRANSCRIPT: FINANCIAL REGULATION REFORM: POLITICS, IMPLEMENTATION AND ALTERNATIVES; 18 N.C. Banking Inst. 71; kdf)
In most countries, and certainly in the U.S., particularly after the [*80] Dodd-Frank Act, regulators have sufficient authority to keep the system safe. Yet they are failing. For example, for the third year, the Federal Reserve has allowed most large U.S. banks to pay dividends to shareholders. The policy chooses the banks' interests over those of the public. There is no justification for allowing these payouts by the banks. The payouts benefit primarily the bankers them-selves, or those whose holdings are concentrated in the banks. Diversified shareholders and the public are exposed to unnecessary risk and the system is made more fragile. The stress tests are very flawed and unconvincing. Why are policymakersfailing? If you listen to them, they will have their narratives and their "analyses." A favorable narrative holds that everything in banking is "just a liquidity problem." Think of it as the "plumbing narrative." The narrative is convenient, because it starts with runs and breakdowns that appear as if they are a natural disaster, thus avoiding the question of why regulators and supervisors allowed these risks to build up. The banks lobby using very flawed claims,and they are successful because they are rarely challenged either be-cause those involved do not know how to challenge the claims (they might in fact agree with them), or because they do not want to challenge the claims. The public gets scared by the threats made by the lobbyists about all the terrible things that would happen if regulators try to make banks safer.
Ensuring compliance is key—data breaches will cause harsh new rules on emerging tech
2015 will solidify what the leading banks already know: Compliance is key. With the Consumer Financial Protection Bureau paving the way, banking regulators are expected continue to seek out the CFPB-designated Four Ds: deceptive marketing, debt traps, dead ends, and discrimination. Given this focus, banks must ensure they (and their vendors) comply with regulations. Also, given the ever-present retailer data breaches, lawmakers will likely explore how to strengthen protections in the payment system, which may include a focus on mobile banking and emerging technologies. Since Dodd-Frank, there is never a dull moment in the office. The CFPB is very much still in its adolescence and, as with any teenager, it is figuring out its role. Much of our time is spent trying to anticipate what product or service the CFPB will concentrate on next. Over the past couple months, we have been focused specifically on their complaint database proposal, Home Mortgage Database (HMDA) proposed rule, overdraft studies, and prepaid proposal. We expect the CFPB to tackle overdraft, debt collection, payday lending, and arbitration in the first half of next year, and finalize the HMDA rule during the summer. In 2015, vendor management is going to be the name of the game. From data breaches to system implementation, to fair lending, all eyes are going to be on the vendors. TILA/RESPA integrated disclosure implementation is going to be a headache in 2015. Despite their diligent efforts, many of our members are concerned their systems will not be ready by the August 2015 deadline because of the limited number of vendors in the market. We have voiced these concerns to CFPB Director Cordray, who said he is looking into the issue. Once TILA/RESPA systems are installed, work will almost immediately need to begin on HMDA implementation. The magnitude of these changes is yet to be seen, but the addition of commercial loans and/or HELOCs will create an immense strain on the industry. This is not even mentioning the Dodd-Frank-mandated small business data collection process that is slated to begin the end of 2015. Last year, we sent the CFPB a whitepaper explaining the impact on the industry, and are actively engaging with the Bureau as they begin the rulemaking process. Banks should try to stay one step ahead of deadlines and plan for regulatory changes before they occur. Although the August 2015 deadline seemed far off when the final TILA/ RESPA rule was released, implementation takes longer than expected and complications are bound to arise. This is why strong compliance departments are critical -- only then can banks stay ahead of the game and avoid last-minute stress.
Wrong on everything – small rural banks that loan to farmers aren’t involved in OG, they’re resilient, Dodd-Frank and commodity prices are an alt cause, and farmers can always get loans from somewhere because they have amazing fucking credit
Paul Ellinger 4-22-2011 Department of Agricultural and Consumer Economics University of Illinois The Financial Health of Banks Lending to Agriculture http://farmdocdaily.illinois.edu/2011/04/the-financial-health-of-banks.html
Most commercial banks lending to agriculture have weathered the financial tsunami of the past 36 months. Many of the agricultural-related banksdid not participate aggressivelyin the high-risk housing or commercial real estate markets. As a result, agricultural banks did not sustain the substantial liquidity and capital problems faced by many global financial institutions. In general, credit remained available for farmers and ranchersthroughoutthe financial crisis.The profitability of production agriculture through the crisiscertainly played a critical rolein credit quality and quantityat agricultural banks. Agricultural lending increased $13 billion from 2007 through 2010. At the end of 2010, delinquency rates on agricultural loans (2.55%) are lower than the other loan typesand far below agricultural delinquency rates exhibited during the agricultural financial crisis in the late 1980s. 220411_fig1.jpg Banks lending to agriculture are often characterized by small-rural banks. However, the distribution of banks lending to agriculture can be viewed as a barbell. A few large banks hold a large portion of the total portfolio and thousands of smaller, community-oriented banks lending to agriculture hold a large segment as well. At year end 2010, there were 5,703 banks in the U.S. that provided loans to agriculture. Illinois ranks second (459 banks) to Texas (548 banks) in the number of banks that provide loans for agricultural production or secured by farm real estate. The five largest U.S. institutions lending to agriculture hold 15% of the portfolio of bank loans to agriculture. The five largest agricultural lenders are Wells Fargo ($9.2B), Bank of the West ($3.0B), Rabobank ($2.6B), Bank of America ($2.5B) and U.S. Bank ($1.7B). Collectively, these banks hold more agricultural loans than the 2,468 banks with less than $100M in assets. Figure 2 shows the distribution of agricultural loans by bank size. 220411_fig2.jpg Based on data from FDIC, the profitability of banks with concentrations in agriculture improved in 2010. The average rate of return on assets (ROA) for banks with concentrations in agriculture was 0.88% in the 4th Qtr 2010 exceeding the average for all commercial banks (0.64%). The ROA in 2010 was also 63% higher than the same period in 2009. The average charge-off rate for banks with concentrations in agricultural also improved substantially in 2010 and was the lowest across all FDIC concentration groups. Although credit conditions have improved across the banking sector, a substantial number of bank failures have occurred. Over the first four months of 2011, 34 banks closed while over 150 banks failed in 2010. However, only two of these bankshad more than $100 million of agricultural loans. Collectively, these banks held about $1.2 billion of agricultural loans. There have not been substantial credit delivery disruptions to farmers and ranchers because of bank failures.While the financial health of agricultural banks has improved, these institutions face new and significant challenges. New regulations from the Dodd-Frank Wall Street Reform and Consumer Protection Act will add regulatory compliance costs. Typically, as a share of total operating costs, these compliance costs are greater for smaller banks. There will likely be continued pressure to merge institutions and gain potential cost economies and synergies. Moreover, volatilecommodity and farm input cost marketsincrease the cash flow risksfaced by farmers and agricultural lenders. Agricultural banks will have to continue to manage and monitor risks and explore opportunities to maintain competitiveness and profitability. In summary, prudent risk managementand a strongagricultural economy have resulted in a banking industry that is well-positionedto meet the continued financial needs of farmers. Stay tuned for a future farmdocdaily column that summarizes the strong financial health of the Farm Credit System.
No international regulation
La Vigne, 14 - Associate Editor of the Michigan Journal of International Law (“All In: The Importance of International Consensus to the Regulation of Internet Gambling,” Michigan Journal of International Law, 3/31/14, http://mjilonline.org/?p=889 //Red)
One issue making international consensus much harder to achieve is the wide variance in responses to gambling among jurisdictions.In the United States, the individual states are primarily responsible for regulation, and each state has views ranging from prohibition to allowing only specific activities. Responses to online gambling amongst states in the European Union follow a similar pattern, ranging from relatively no restriction to near complete restriction. Variation in the level of restriction may stem from the lack of consensus on the risks online gambling entails, with “divergence in opinion [centering] on the issues of criminality and increased potential for addiction.” This focus on deeply held moral beliefs stresses the need for mutual recognition and the allowance of slight tweaks to the system of international regulation. Further, there is a lack of research on the psychological effects of online gambling or its potential effect on criminality, leading to uncertainty surrounding the extent of online gambling’s effect on society. Researching the financial characteristics involved in online gambling is also very problematic. This stems from the fact that “online gambling is still a largely invisible industry” with a “questionable legal status and [an] absence of regulatory bodies to which commercial online gaming operators must report.”
Lastly, the variance in tax rate is perhaps the most substantial barrier to international consensus.In Australia alone, tax rates on online gambling in the various territories range from eight percent to 50 percent. Similar variation exists among the European Union Member States. Such variation allows for “tax jurisdiction shopping,” where providers locate themselves in the most favorable jurisdiction, resulting in a loss of tax revenue for other jurisdictions. To avoid this, “some degree of tax harmonization” is necessary to reach an international consensus on regulation. This creates a very compelling need to reach an international consensus among as many jurisdictions as possible to avoid the problem of a nonparty undercutting the agreement with more favorable tax rates and a lower level of regulation.
In conclusion, a number of substantial barriers stand in the way of reaching an expansive international consensus on the regulation of Internet gambling. Jurisdictions may need some leeway to tweak regulations to best suit their individual situations, but close attention must be paid to ensure they are not subverting the regulatory system. Seeing that strong moral viewpoints are in play, convincing a large number of jurisdictions to join in also poses a big challenge to international consensus. Finally, harmonizing taxation among the jurisdictions may prove to be the most daunting barrier. Without some level of tax harmonization, a system of international regulation will likely fall victim to tax jurisdiction shopping, which would undermine the system’s effectiveness. Should providers choose to locate in a jurisdiction that is not party to the consensus as a result of jurisdiction shopping, the system is likely to be ineffective. Reaching the necessary consensus entails substantial transaction costs. The decision of whether regulation efforts are truly worth it may come down to weighing these costs against the tax revenue that each jurisdiction could derive from regulation, versus letting these tax benefits go unrealized under systems of prohibition.
Valasek says if an international scheme emerges – doesn’t say it’s likely
Valasek 07 Katherine A. Valasek, B.A., Political Science, Drew University; J.D. Candidate, Michigan State University College of Law, 2008, Fall 2007, Mich. St. L. Rev., “WINNING THE JACKPOT: A FRAMEWORK FOR SUCCESSFUL INTERNATIONAL REGULATION OF ONLINE GAMBLING AND THE VALUE OF THE SELF-REGULATING ENTITIES”, 753
The unwillingness of the United States to regulate Internet gambling will cause additionalproblems if, and when, an international scheme is devised.211 As the current system develops, countries will continue to develop independent and unique methods of regulating online gambling.212 Creating a unified regulatory standard will be far more difficult to achieve afterthese individual methods have been establishedthan if the international community works together early in the evolution of Internet gambling regulation to develop a uniform scheme. An incremental system initiated in the United States that addresses domestic concerns and lays the groundwork for international cooperation would be most feasible.
Valasek 07 Katherine A. Valasek, B.A., Political Science, Drew University; J.D. Candidate, Michigan State University College of Law, 2008, Fall 2007, Mich. St. L. Rev., “WINNING THE JACKPOT: A FRAMEWORK FOR SUCCESSFUL INTERNATIONAL REGULATION OF ONLINE GAMBLING AND THE VALUE OF THE SELF-REGULATING ENTITIES”, 753
The exact method of international regulation that could be chosen is purely speculative at this point; however, there are several options that could be used to achieve international regulatoiy continuity. For litigation purposes, an independent tribunal of judges could be created to handle conflicts. Alternatively, agreement could be reached through a choice of forum clause, linking the dispute resolution process to an already existing international organization, or creating a new international organization since the advent of International gambling has created relationships between countries that have not interacted closely in the past. The new international organization would be specifically mandated to settle Internet gambling disputes.
A problem with creating an independent tribunal is the time and logistical work necessary. The creators of the tribunal would have to address basic issues of the tribunals formation such as whether every country would appoint a representative judge, whether judges would sit for life or for an elected period of time, whether judges would operate on a rotating schedule or hear every case, and whether the position as head judge would be a permanent or rotating one. However, addressing these issues would merely be time consuming, not impossible.
Other approaches are complicated as well.Choice of forum clauses would be problematic in their enforcement since each country involved in the dispute would likely believe that its laws are best at resolving the dispute. The United States and Europe, for example, have “different versions of conflicts law.”2® Enforcing another country’s laws is difficult because thereis no “shared legal culture,”which gives rise to fundamental substantive differences with no “common constitutional umbrella ensuring even a minimum of mutual respect.”210
Seeking regulatory continuity through existing international organizations is equally problematic.Membership in these organizations is limited. The organizations’ jurisdiction over non-member countries is questionable, and it is unclear whether the organizations should admit a new member each time a country implements a regulated system for Internet gambling. Alternatively, how will countries that do not have a regulated form of Internet gambling, like the United States, get involved in the decision-making process? Creating a new international organization is the best avenue. Alt-hough a new international organization would further complicate the international arena and require time, energy, and money, it is the only feasible way to link countries like Antigua, Australia, and Liechtenstein that have very little else in common.