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Attack is not an appropriate stance at the start of year. Instead, let me state my three wishes for 2002.

I wish Congress would get serious about the anti-money laundering law. The Financial Action Task Force has reportedly expressed concern about the rather high threshold that has to be met before a transaction gets into the reporting net established by the law. If we do not concede a lower threshold, all that goodwill earned last year by our finishing the law in record time, would go for naught.

Actually, the threshold amount is not the only problem with the law. There are those provisions which, if not properly clarified in the rules and regulations (which by the law are already long overdue by now from the Congressional Oversight Committee), would serve to take the sting out of an otherwise good law. Among the provisions which need to be reviewed are (a) the requirement of unanimity of all the members in all acts of the Anti-Money Laundering Council; (b) the need for a court order to authorize the Anti-Money Laundering Council to inquire into or examine any particular deposit or investment: and (c) precedence granted to any proceedin g relating to an unlawful activity over the prosecution of any violation of the anti-money laundering law.

My second wish is quick congressional action on pending bills providing for a hospital environment for the establishment of two major institutions, namely an asset management company to pick up the banking system’s non-performing assets, and a fixed income exchange. The first is urgently needed to speed up the process by which the banks can rid themselves (no doubt with a lot of pain) of ever increasing bubbles in the asset side of their balance sheets’ the second is necessary to tap into a reservoir, undoubtedly existing in the country, of funds ready to be invested in quality papers, provided that liquidity is available though a market-driven mechanism that is transparent and efficient.

My gut feel is that banks, while privately admitting the need for transferring their non-performing assets to an asset management company, are presently using the tax consequences to them of the transfer, in holding back in the hope of being able to transfer their assets at levels of discount lower than those the asset management company proponents are asking for. It is important, I believe, to remove this alibi from the banking system, in order to force the banks to confront in a market driven way the consequences of their own credit decisions.

The fixed income exchange is an idea that has been long aborning. No one has any serious objection to it; everyone concedes that it is a major component needed in the development of our capital market. Yet, the private sector is hesitating to put its money into the project hoping that the government could be coaxed into reducing the tax consequences of actively trading in fixed income instruments. Again, the crucial step is to remove the reasons for foot dragging and challenge the private sector to put its money where its mouth is.

Final wish is for true tax reform. Tax ligitation must be streamlined. Tax collection must be improved. Tax compliance must be easy to do and worth while rewards must be given to the law abiding. More about this later.

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