Treasury Secretary Geithner: Tax On Big Institutions Will Offset TARP Costs

By Justine Rellosa- Talk Radio News Service

Treasury Secretary Tim Geithner cast levying a tax on large financial institutions as a significant step in offsetting the costs incurred through the Troubled Assets Relief Program (TARP).

“This was an expensive financial crisis. It caused a lot of damage to our long term fiscal position,” Geithner said Tuesday during his testimony before the Senate Finance Committee.

Geithner explained that the affected firms are made up of those that have over $50 billion in assets and are eligible for emergency assistance programs.

“We thought the fairest way to do this was to apply the fee to the firms that contributed the most to the crisis.”

The tax will be collected throughout the decade and ultimately seeks to gather $90 billion.

Treasury Should Mandate Mortgage Modifications, Says TARP Watchdog

The man in charge of monitoring the Troubled Assets Relief Program (TARP) told members of the Senate Finance Committee Tuesday that the Obama administration should consider forcing lenders to reduce payments for homeowners behind on their mortgages.

Neil Barofsky, the Special Inspector General of TARP, a $700 billion financial rescue program designed to help cushion the blow of the recent housing collapse, said that foreclosures have increased since the current administration announced measures last year to straighten out the housing market.

According to Barofsky, the Treasury Department's Home Affordable Modification Program (HAMP), a voluntary $75 billion foreclosure-prevention policy which gives payments to lenders who agree to reduce the principal on homeowners' loans, “has made very little progress in stemming this onslaught."

In a report put out Tuesday morning, Barofsky wrote that the Treasury Department could do more for borrowers by making the program mandatory.

"Giving servicers the discretion to implement principal reduction introduces a questionable inconsistency into the HAMP program and stands in stark contrast to the mandatory nature of the other significant mortgage modification triggers."

Bonuses From Companies Bailed Out By TARP Could Be Taxed

By Laurel Brishel Prichard University of New Mexico/ Talk Radio News Service

Sen. Barbara Boxer (D-Calif.) and Sen. Jim Webb (D-Va.) introduced a bill that would tax bonuses distributed by financial institutions bailed out by the Troubled Assets Relief Program (TARP) during a press conference Thursday afternoon.

The bill would place a 50 percent tax on bonuses over $400,000. Some of the companies that would be hit include Bank of America, Citigroup, Goldman Sachs, Merrill Lynch, Morgan Stanley, JP Morgan and Wells Fargo.

The bill would require a tax on the bonuses even if the companies have already paid back the money initially received through TARP.

“If your going to get that kind of bonus, you can share it 50-50 with the people who helped bail you out. We believe that's fair, reasonable and its not any example of what people will call class warfare,” said Webb.

Both Senators hope for bipartisan support on the bill.

Democratic Caucus Planning Jobs Legislation Before Christmas

By Leah Valencia - University of New Mexico/Talk Radio News Service

House Democratic Caucus Chairman Rep. John Larson (D-Conn.) said Tuesday that the House of Representatives will pass a job creation bill before Congress breaks for its Christmas recess.

“We feel we can move fairly quickly,” Larson said following a Democratic Caucus meeting. “We have a limited amount of time left, but we feel we can accomplish those goals in that time period.”

The legislation proposed by House Democrats would use Troubled Asset Relief Program (TARP) funds to pay for the job creation program, an idea that was endorsed by President Barack Obama during his remarks at the Brookings Institute earlier in the day.

“I am glad President Obama agrees with proposals set forth by House Democrats to use returning TARP funds to pay for job creation legislation,” Larson said. “It is time for Wall Street to help rebuild Main Street. We will take steps in the coming weeks to make sure that happens.”

Larson said the size and cost of a jobs package will depend on further discussions with the executive branch, but the need for job stimulation is a top priority within the House.

Senate Medicare Expansion Proposal 'Worth Consideration,' Says House Majority Leader

By Meagan Wiseley, University of New Mexico-Talk Radio News Service

House Majority Leader Steny Hoyer (D-M.D.) told reporters Tuesday that the proposed expansion of Medicare being discussed in the Senate is "an idea worth consideration."

"I think [Senate Majority Leader Harry] Reid obviously is trying to get his caucus to a place where he can get 60 votes to pass a health reform bill," he said. "I congratulate him for the extraordinary Herculean efforts that he is making to bring 60 votes together to get something done in the Senate."

The expansion would allow individuals from the ages of 55 to 64 to buy into Medicare and would also create a non-profit funded healthcare plan for those who are not covered through their employers.

Hoyer also said Congress is currently working on job creation legislation, using left over TARP money for infrastructure projects and job creation. He said depending on the components of the bill, it could cost between $75 billion and $150 billion.

"100 billion, 150 billion, 75 billion, those are all figures that are being talked about, depending on what the component parts are," he said. "And I don't think anybody feels that this package will be the only package in terms of jobs that we'll look at over the next two or three months."