Thursday
Jan142010
Obama Proposes Wall Street Tax
Thursday, January 14, 2010 at 9:14AM
President Barack Obama announced today a proposal to levy charges on large financial firms that benefited either directly or indirectly from the Troubled Asset Relief Program (TARP).
According to the President, the objective of the new financial crisis responsibility fee will be to hold accountable those firms which helped create one of the greatest financial meltdowns in recent history, and to ensure that taxpayers don't bear the total cost of TARP.
"We want our money back, and we're gonna get it," said Obama.
The fee will apply to roughly 50 firms - most of which are major U.S. financial institutions - including insurance companies like AIG. The President is expected to name specific others when he submits his 2010 budget plan. The administration believes the fees will generate roughly $90 billion over the next ten years, almost enough to completely recoup the $117 billion worth of TARP money that has been issued so far.
In his announcement, Obama called for the fee to apply for a minimum of ten years, but warned that it could last longer if it fails to pay off TARP funds by then. The tax will not be applied to Fannie Mae or Freddie Mac, nor will it be levied solely on firms that accepted bailout money, according to senior administration officials.
Critics of the plan have questioned its fairness in recent days. Even the President's own Treasury Secretary, Timothy Geithner, suggested that big banks would pass the costs of a tax down to their customers. However, the administration has countered that argument by suggesting that firms slash executive bonuses as a means of breaking even.
Though Congress could take months to pass legislation, the plan is being received well by certain key Democrats. "I strongly support this proposal, and I am confident that the Committee on Ways and Means will be acting on it soon,” said Rep. Barney Frank (D-Mass.).
In fact, Rep. Peter Welch (D-Vt.) has already introduced a bill that would tax all bonuses in excess of $50,000. Revenues generated from the tax would fund a new direct lending program administered by the Small Business Administration (SBA).
According to the President, the objective of the new financial crisis responsibility fee will be to hold accountable those firms which helped create one of the greatest financial meltdowns in recent history, and to ensure that taxpayers don't bear the total cost of TARP.
"We want our money back, and we're gonna get it," said Obama.
The fee will apply to roughly 50 firms - most of which are major U.S. financial institutions - including insurance companies like AIG. The President is expected to name specific others when he submits his 2010 budget plan. The administration believes the fees will generate roughly $90 billion over the next ten years, almost enough to completely recoup the $117 billion worth of TARP money that has been issued so far.
In his announcement, Obama called for the fee to apply for a minimum of ten years, but warned that it could last longer if it fails to pay off TARP funds by then. The tax will not be applied to Fannie Mae or Freddie Mac, nor will it be levied solely on firms that accepted bailout money, according to senior administration officials.
Critics of the plan have questioned its fairness in recent days. Even the President's own Treasury Secretary, Timothy Geithner, suggested that big banks would pass the costs of a tax down to their customers. However, the administration has countered that argument by suggesting that firms slash executive bonuses as a means of breaking even.
Though Congress could take months to pass legislation, the plan is being received well by certain key Democrats. "I strongly support this proposal, and I am confident that the Committee on Ways and Means will be acting on it soon,” said Rep. Barney Frank (D-Mass.).
In fact, Rep. Peter Welch (D-Vt.) has already introduced a bill that would tax all bonuses in excess of $50,000. Revenues generated from the tax would fund a new direct lending program administered by the Small Business Administration (SBA).