By Gordon Platt
Obama: Banks should call off their lawyers and lobbyists
As a Congressional commission opened hearings last month on the cause of the financial crisis, United States president Barack Obama proposed a tax on the 50 biggest banks to pay for the cost of rescuing them. The president also lambasted the banks for trying to block reforms to the regulatory system that could help ensure that the country and the world are spared a repeat of the crisis.
“We’re already hearing a hue and cry from Wall Street suggesting that this proposed fee is not only unwelcome but unfair, that by some twisted logic it is more appropriate for the American people to bear the cost of the bailout rather than the industry that benefited from it, even though these executives are out there giving themselves huge bonuses,” the president said.
Obama told the banks to call off their lawyers and lobbyists and just do the right thing. The White House wants the tax to pay for the $117 billion the US Treasury estimates the Troubled Asset Relief Program (TARP) could end up costing taxpayers. The levy would be collected for a minimum of 10 years. It would have to be approved by Congress, but passage is considered likely in light of the public outcry against the banks, which are widely held responsible for causing the financial crisis and the Great Recession that followed.
The tax would apply to financial firms with more than $50 billion in assets and would be assessed at a rate of about 0.15% of an institution’s liabilities after subtracting its domestic deposits and core capital. The White House says the levy on the debts of financial firms would provide a deterrent against excessive leverage. Many of the largest banks contributed to the financial crisis through the risks they took, and all of them benefited from the taxpayer assistance provided to Wall Street, the administration says. Now it wants them to help keep the deficit from increasing.