Obama Proposes To Tax Largest Financial Firms

President Obama wants the bailout money paid back with additional fees attached. He wants to impose a tax on the banks who are now repaying the bailout money back. “Every single dime the American people are owed, [will be returned],” said the President.

“If these companies are in good enough shape to afford massive bonuses, they surely are in good enough shape to afford to pay back every penny to taxpayers,” said Obama. Everyone is suspicious and angry about the amount of bonuses bank executives are being paid because it was coming out of their tax dollars. The economy in turmoil, so many in fear of losing their jobs and homes, while bank executives are receiving rewards for starting this entire mess. Some of which have still not repaid the bailout money.

Paying back their debt to the American people should be the bank’s highest priority. Apparently for most, the compensation of their already overpaid employees has taken the first ranking on their priority list.

President Obama wants to pass a Financial Crisis Responsibility Fee. This new fee is expected to collect about $9 billion a year for at least 10 years. A 0.15% fee would be taxed on the bank’s liabilities. The tax would apply to insurance companies and any other financial institute with at least $50 billion in assets; including insurance companies and excluding insured deposits.

June 30th is the expected date for the tax. For those firms who have already paid the TARP money will be included and those who did not repay will also be responsible for the tax. General Motors Co. and Chrysler Group will not be affected by this tax, even though they did receive about $64 billion in bailout money. Senior administration official stated that imposing this plan on manufacturing companies would be “logistically difficult”.

Congressional Oversight Panel released a report which stated that banks will be in charge for losses invested in General Motors Co. and Chrysler Group as well as the loan modifications programs available for those individuals whose homes are in foreclosure. He found that even if financial institution were doing well, if the others in the industry were unable to bounce back, financial institutions would fail alongside. This is the reasoning he gave behind making financial institutions responsible for the automobile industries debt.

Obviously, lenders at this point are angry they have to pay for the auto industry’s debt. They paid back their debts and automobile industry should take care of their own.

Republicans are against this tax. Rep. Jeb Hensarling (R-Texas) said, “To think that banks will loan more money if you tax them more is fundamental economic ignorance. It is small wonder the nation remains mired in double-digit unemployment under such policies.” Democrats want to tax financial firms more and they want to impose a higher tax on the bonuses their executives received, from 36% to 50% on bonuses over $50,000.

Obama continues to defend this tax stating that banks should not waste their time fighting the tax, instead they should take responsibility. The President mentioned in his speech that banks should not try to pass this tax down to their clients.