UPDATE 1-Much work to do on bank tax – US Treasury official

* G20 countries must work ahead of Toronto meeting

* ‘Broad agreement’ that public should not fund bailouts

* US has No international aspirations for ‘Volcker rule’
(Adds quote, background on bank tax)

By Emily Flitter

NEW YORK, June 8 (BestGrowthStock) – Members of the Group of 20
countries have much work to do on the details of a proposed tax
on financial institutions ahead of the G20 leaders’ meeting in
Ontario, a U.S. Treasury official said on Tuesday.

Marisa Lago, assistant Treasury Secretary for international
markets and development, told an audience of international
bankers there was broad international support for the idea that
taxpayers should not shoulder the burden of bailing out
financial firms. She said there was also broad agreement that
the largest financial institutions needed to internalize the
cost of their risk-taking.

But individual G20 countries have more work to do, she
said.

“There is a lot of work ahead before the G20 leaders’
meeting later this month in Toronto to reach agreement on
another level of detail on more granular principles for
national bank levies,” Lago said.

“It’s a challenge that I believe can be met, but one that
is going to require a lot of work because of the fact that
countries around the world had to intervene in very different
degrees and to different extents and some not at all as a
result of the recent financial crisis.”

Proposals for a tax on big banks designed to address the
cost of bailing them out during the financial crisis have
circulated in the United States and Britain but the idea
foundered during last weekend’s G20 finance ministers meeting
in Busan, South Korea. The European Union said on Tuesday that
it would continue trying to create a bank tax despite the
setback in Busan. [ID:nLDE6571Q6]

Lago also told the meeting of the Institute of
International Bankers the potential effects that higher capital
requirements for banks could have on global growth were “front
and center” on regulators’ minds.

She also said the Treasury was keenly aware of the European
debt crisis’s impact on the U.S. economy.

“It would be hard to overstate the significance” of
Europe’s crisis for the United States, she said. “We recognize
it’s a global economy and what happens in Europe has
ramifications for the U.S.”

She added that not every proposed U.S. financial regulation
would be repeated in regulatory reform proposals by other
countries.

The ‘Volcker rule’ — a move to separate banks’ proprietary
trading from trading on behalf of customers — “is one of those
instances where one doesn’t expect that will be rolled out
globally,” Lago said.

Investing Analysis
(Reporting by Emily Flitter; Editing by Chizu Nomiyama)

UPDATE 1-Much work to do on bank tax – US Treasury official