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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: Peter Dierks who wrote (40422)	1/13/2010 10:34:24 AM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 71588

Re: "We understand." I highly DOUBT that! :-) Obama to Announce Fee on 20 Banks to Recoup TARP (Update3) January 13, 2010, 09:06 AM EST businessweek.com (Adds report on stimulus in 8th paragraph.) By Julianna Goldman and Ryan J. Donmoyer Jan. 13 (Bloomberg) -- President Barack Obama will announce his intention to impose a fee on more than 20 of the country’s largest banks and financial institutions to help recoup taxpayer bailout money and trim the federal budget deficit, an administration official said. The fees, expected to be spread over as many as 10 years, will be based on the leverage or amount of liability each firm has, said the official, who spoke on the condition of anonymity. Obama will outline his proposal to raise as much as $120 billion at an event at the White House tomorrow, according to the official who spoke on the condition of anonymity. The final cost of the fees will be based on total losses from the Troubled Asset Relief Program, or TARP, which administration officials expect to drop from the current Treasury estimate of $120 billion. The White House declined to provide a list of banks that would be targeted. The move may have a bigger political than fiscal impact. By including it in the budget message that he will send to Congress next month, the president is tapping into public anger over the bailouts of the financial and auto industries, executive bonuses as well as the deficit. “The politics on this is really quite easy,” said Doug Elliott, a fellow at the Brookings Institution in Washington and a former managing director at JPMorgan Chase & Co. “The public would be supportive of anything up to shooting and burning the bankers.” Unemployment With the unemployment rate at 10 percent and the deficit forecast by the White House budget office to surpass $1 trillion again this year after hitting $1.4 trillion in 2009, Obama and the Democratic Party are seeking to limit voter discontent before the November congressional elections. The economic stimulus passed almost a year ago was responsible for between 1.5 million and 2 million jobs in 2009 and helped boost U.S. economic growth during the year, the Obama administration reported today. Adding to potential public backlash are reports that Wall Street’s bonus season may be one of its largest even as the economy struggles to pull out of the worst recession since the 1930s. Top House Democrats said the president has a winning issue. “I’m all in favor of it, but I haven’t seen specifics,” said House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat. Michigan Representative David Camp, the top Republican on the Ways and Means Committee, said while he and other Republicans find bonuses being paid by banks that got bailouts “irresponsible” and “outrageous,” they are concerned that taxing banks will hurt lending, and thus job creation. Still, he said, the proposal puts Republicans in a box. “We’re in the political season,” he said, referring to mid-term congressional elections scheduled for early November. “It’s going to be a tough bill politically to oppose.” Getting the Message The administration is still working out the final details of the levy, which will be part of the fiscal 2011 budget submitted to Congress in early February. The bank levy has been part of discussions since August among Obama and his advisers about ways to recoup taxpayer bailout money and reduce the deficit, advisers said. The financial industry has been a frequent administration target. Obama has leaned on banks to boost lending to small businesses and homeowners facing foreclosure, support his plans for revamping financial regulations and discourage bonuses that encourage excess risk taking. “They’ve had a year to figure out how they wanted to participate in the nation’s recovery and they don’t somehow seem to have gotten that message,” said Anita Dunn, former White House communications director. Public Reaction At meetings with bank executives in Washington and on Wall Street Obama has called on the industry to play a greater role helping Main Street. After a Dec. 14 White House session with executives from some of the nation’s largest banks, the president said that now that financial institutions are stabilized after taxpayer bailouts, “we expect an extraordinary commitment from them to help rebuild the economy.” In an interview broadcast the night before, Obama told CBS’s “60 Minutes” program that he didn’t run for president “to be helping out a bunch of fat-cat bankers on Wall Street.” Populist anger about bank bailouts spans party lines. Almost two-thirds of Americans believe that aiding the banks was a bad idea, a Bloomberg National Poll taken Dec. 3-7 showed. The levy would hit banks even though the aid is being repaid. Treasury Secretary Timothy Geithner said last month that the government stands to make a “healthy profit” on the money paid out from the $700 billion TARP fund. Investment The U.S. is unlikely to recoup its investment in insurer American International Group Inc. or automakers General Motors Corp. and Chrysler Group LLC. Those losses and money spent to stem mortgage foreclosures are estimated to be about $120 billion. An administration official who spoke on condition of anonymity said the government expects a maximum of $120 billion to be recouped over 10 years. The fee would taper off as the TARP money is paid back and the total may change if the loss shrinks, the official said. Levying the fee over 10 years will mitigate the impact on parts of the industry that are still hurting, Brookings’s Elliott said. “If you do it as too onerous a burden in concentrating it over fewer years it adds to the chance they’ll pass the cost onto customers,” Elliott said. Dunn, who still advises the president, said the administration’s challenge is to figure out how to make the financial industry’s “participation in the recovery for the rest of the country meaningful, without doing it in such a way that it creates a potential problem down the road for them.” --With assistance from Hans Nichols, Edwin Chen and Roger Runningen in Washington. Editors: Joe Sobczyk, Brigitte Greenberg, Mike Tackett. To contact the reporter on this story: Julianna Goldman in Washington at +1-202-654-4304 or jgoldman6@bloomberg.net; Ryan J. Donmoyer in Washington at +1-202-624-1887 or rdonmoyer@bloomberg.net To contact the editor responsible for this story: Jim Kirk at +1-202-654-4315 or jkirk12@bloomberg.net.