This proposal is not new and is known under different names: "Same Country Exception" or "Safe Harbour Exemption." Here is what the different Americans abroad organizations have to say about it:
American Citizens Abroad
"ACA, Inc. proposes a FATCA Same-Country Exception for accounts of US taxpayers resident abroad. If implemented, this would help alleviate the problem of financial services lock-out currently being experienced by Americans resident overseas. In a letter to the Treasury Department (Oct. 2013), ACA, Inc. has asked that this rule be applied for bank accounts held by American citizens in their country of residence."Association of Americans Resident Overseas-Federation of American Women's Clubs Overseas
"Short of repeal, the same country exception, also called “safe harbor” in Washington, has been AARO’s position concerning FATCA. The idea is that we are bona fide residents of another country than the US and the accounts in that country are our domestic accounts. We would like the US to consider them as domestic accounts and not foreign accounts. To do this would require regulatory change in Washington, which, given the frigid relationship alluded to before, will not happen without congressional mandate. It would also require the banks where we live to agree to it.Democrats Abroad:
"When a safe harbor exemption is applied to FATCA, the law would treat the financial accounts of Americans abroad in their country of residence the same way as it treats the US accounts of Americans residing in the US. In brief, foreign financial institutions would be exempt from filing FATCA reports on the accounts of US-tax compliant Americans residing legally in the same country. A FATCA safe harbor exemption would only exempt accounts held in the country in which the account holder is legally resident."
All of the Americans abroad organizations (with one exception) support it as the solution most likely to be accepted and implemented by the US government. As much as Americans abroad would like to see FATCA disappear, these organizations argue that this is not realistic and that FATCA won't be going away any time soon. That is the consensus and, separately or together, all of them have lobbied Washington for several years now in support of this idea.
There is one organization that is taking a different stance and that is Republicans Overseas. They want to repeal FATCA and the Republican National Committee passed a resolution in 2014 to that effect.
"RESOLVED, The Republican National Committee hereby presents this Resolution to each Member of Congress and urges the U.S. Congress to repeal FATCA, to defend the livelihood and increase the competitiveness of Americans overseas, to remove inappropriate invasions of Americans citizens’ privacy, and to allow those U.S. citizens who renounced their citizenship due to FATCA to regain their U.S. citizenship..."
The Republicans have also launched a lawsuit - FATCA Legal Action - against FATCA (Flophouse post here). They say that FATCA is not only detrimental to Americans abroad but it also violates their consitutional rights.
US citizens living outside the United States, these are the proposals, actions, initiatives on the table right now. This is what these organizations are asking (or fighting) the US government for on your behalf and in your name - "We represent the interests of the 7 million Americans abroad...." That means YOU and YOUR interests.
I urge you to take a few minutes to follow the links above with an open mind - please don't let preconceived notions about "women's clubs", "Republicans', or "Democrats" get in the way.
Read each organization's proposal carefully so that you understand what they mean by "Same Country Exception", "Safe Harbor", "Repeal FATCA" and "FATCA Legal Action". If there is something you don't understand, ask. If there is something you don't agree with, say so.
And once you have done your due diligence and made up your mind, there is one last question to ask:
What can I do to help?