Exclusive: Obama budget likely to include (as yet undetermined) fee on banks to help taxpayers

[kpete]

Source: Politico

Exclusive: Obama budget likely to include (as yet undetermined) fee on banks to help taxpayers recoup cost of bailout -- Romer still sees recovery beginning in spring
By: BEN WHITE & VICTORIA MCGRANE & MIKE ALLEN on January 11, 2010 @ 5:57 AM

EXCLUSIVE: Top administration officials tell Morning Money that President Obama’s budget, to be unveiled next month, is likely to include a fee on banks designed to recoup some of the cost taxpayers incurred in the bailout, which specified that the U.S. government should be made whole. This will stop short of a financial transactions tax, and the administration has decided that a tax on compensation packages would be too easily evaded. The officials said the final approach has not been locked down. The chief goal is a fee that is not easily passed along.


Read more: http://www.politico.com/morningmoney/0110/morningmoney58.html

[Don Caballero]

1. This is welcome news

Shows Americans that our President gets it. This will certainly help the taxpayers during the recession.

[Wapsie B]

2. Wouldn't any fee levied on banks just be passed back on to the consumer?

Just wondering.

[dmallind]

5. Certainly possible, but fees can be hard to discretely assign and pass on

Personally I'd go for a surcharge based on EBIT or EBITDA filed with their SEC (for public) or IRS (for private) paperwork. They have the incentive to maximize that for owner equity and investors, and yet it is hard to tie to individual cuatomers. Certainly they will try to raise fees etc but each bank will use a different approach and consumers can shop between them to choose fees that would not apply to them. I have little to no risk of an opverdraft for example so I can pick a high overdraft fee with no fee. People who don't use online banking like I do could pick a high online banking fee account, and so on.

[Exen Trik]

13. Look at it this way:

The banks are going to charge us as much as possible, no matter how much we tax them. So let's just get back as much of what they steal from us as we can.

[abelenkpe]

3. A fee that is not easily passed along

Cause banks would never nickel and dime their customers to recoup their losses.

I have a better plan. Nationalize the banks and break them up. The people who should be in the unemployment line are the grossly overpaid financial CEOs who brought about this mess. Let's take their salaries and put everyone else to work......

[WriteDown]

7. Not a good plan...

Better plan. Just start a national bank to compete. That way there is still choice, but you can go to the government bank as a choice.

[No Elephants]

14. Because public options do so well in the Senate?

[Demeter]

4. If the Banks REALLY Wanted to Help Taxpayers

They would liquidate themselves, fire all their top grossing employees, and reorganize as credit unions.

[Vincardog]

6. Why would a tax on compensation packages would be too easily evaded? Could

it be because they put whistle blowers in prison?

[Igel]

12. It pays to remember that the current compensation structure is fairly new.

It determined that pay was increasing to quickly for executives and so they found ways to make pay increases have unpleasant tax consequences.

The result was deferred payments and--gasp!--stock options.

Things happened later to reduce the tax consequences of high pay, but they kept stock options.

Having stock options helped produce a very short-term perspective. This helped produce the two most recent bubbles.

So now they're talking about trying to make stock options have unpleasant tax consequences. But some way will almost certainly be found because they're trying to control behavior and ultimately morality and values one small behavior at a time, and people are creative and can move quickly in achieving their personal goals. Much faster than government usually can.

[Abq_Sarah]

8. I'd be interested in the details

Will this be a fee on all banks or just those who received TARP funds... which, they were supposed to pay back anyway?

[DisgustedInMN]

9. I'll believe it whe I see it.

Doesn't sound like something Rahmie or Timmy would let Barack do.

[progressoid]

10. Me too.

And, sadly, it's not just Rahm or Tim. DC is lousy with corporate whores.

[hayu_lol]

11. A very simple 95% tax on salaries above a target amount...

the same to apply to stock transfers and other future-type of financial game-playing.

If there is resistance, then a 100% tax on assets owned by these people. Some of the proposed salary increases/bonuses are in the 7 and 8 figure range.