Confirming various news reports overnight from The Wall Street Journal and others, President Obama late this morning gathered with his economic team to unveil a $90 billion levy on banks, which he referred to as the “financial crisis responsibility fee,” that he said should be imposed “until the American people are fully compensated for the extraordinary assistance they provided to Wall Street.”
The fee is a proposal and must be submitted to congress for action to be taken.
Saying he was motivated in part by “obscene bonuses at the very firms who owe their continued existence to the American people,” Obama said the tax should remain in effect for a decade or more, of neccessary, to recover every penny of TARP bailout funds.
The Administration’s said the tax will be imposed only on financials with assets of $50 billion or more, an that it is designed to raise $90 billion over 10 years and $117 billion over 12 years — the latter figure being the final “cost” the administration estimates for TARP.
The White House’s fact sheet gives a back of the envelope on how the tax will be assessed: 15 basis points against “covered liabilities,” meaning, consolidated assets minus Tier 1 Capital and FDIC-assessed deposits. For a bank with $1 trillion in assets, this could mean $600 million in taxes, which the IRS will collect.
What the Administration’s proposal doesn’t include is any discussion of how the levy may or may not be passed along to the consumer.
What do you think: will bank bonuses take a hit? Or will your checking/ATM/investment banking fees go up?
Bank stocks are mostly shrugging it off. Goldman Sachs (GS), which was down earlier this morning, is up 37 cents at $169.44.
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