This sounds promising.
Obama Weighs Bank Fee to Help Cut the Federal Deficit
By JACKIE CALMES
Published: January 11, 2010
WASHINGTON — President Obama is likely to propose a fee on financial institutions to help reduce the federal deficit when he releases his budget plans in February, although the details remain unresolved, according to administration officials.
The bank fee would recover some of the money that taxpayers put up to bail out the financial system after its near-collapse in the fall of 2008, a rescue effort that has contributed to the largest annual budget deficits since World War II.
Administration deliberations were reported on Monday morning by Politico, but officials have made it no secret that they have been looking at ways to assess fees to discourage risky banking behavior and to raise revenue.
With popular anger building as big banks show profits and pay sizable bonuses while unemployment remains high, the Obama administration has come under pressure at home and abroad to support a financial transactions tax on institutions and to heavily tax their executive compensation.
But the United States, led by the Treasury Secretary Timothy F. Geithner, has been opposed, arguing that a transactions tax would simply be passed on to customers and a bonus tax could be easily circumvented.
The 27-nation European Union called for a global transactions tax in December and Prime Minister Gordon Brown of Britain had proposed the idea in November at a meeting of the Group of 20 developed and emerging nations, saying revenues could be stockpiled to finance any future bailouts. Separately, Britain and France have proposed a large tax on financial executives’ bonuses.
The challenge for the administration is finding an alternative tax that does not share the weaknesses it claims for the other ideas.
Mr. Geithner has said repeatedly that taxpayers should be made whole for the bailout, and Congress included a requirement to that effect in the October 2008 law that established the $700 billion financial rescue program, though it did not spell out how to recoup the money. American taxpayers’ losses will probably be much less than initially feared; big banks have begun paying back their bailout money with interest. Losses could reach $120 billion ultimately, the Treasury has estimated, but most of that relates not to bank bailouts but to lifelines provided to automakers and to the insurance giant American International Group.
Separately, the Federal Deposit Insurance Corporation, which traditionally has collected fees from the banks it regulates to cover the costs of insuring depositors at failed institutions, is considering changes to its formula. The changes would be aimed at increasing levies on banks engaged in risky activities and those that set executive compensation in ways that reward risk-taking.
nytimes.com |
