Archive for Friday, January 15, 2010

Obama proposes tax on largest financial firms

January 15, 2010


— Vowing to recover “every single dime the American people are owed,” President Barack Obama on Thursday proposed a new tax on the nation’s largest financial institutions to recover projected losses from the government’s bailouts.

“We want our money back and we’re going to get it,” Obama said in a short but sharply worded White House speech. “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.”

Obama’s tough talk comes amid public anger about big profits and large bonuses at major financial firms as Wall Street — with the help of taxpayer money — has returned to robust fiscal health while much of the nation struggles to recover.

Obama said the bailouts, which were begun under the Bush administration, were “as necessary as it was unfortunate” because of the vital role large financial institutions play in the economy. Even though many of the firms have repaid the money, Obama said that’s not good enough.

“My commitment is to recover every single dime the American people are owed,” he said. “And my determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people, folks who have not been made whole and who continue to face real hardship in this recession.”

The new Financial Crisis Responsibility Fee would have to be approved by Congress. It would hit about 50 of the nation’s largest financial institutions and generate about $9 billion annually for at least 10 years, administration officials said. The tax would be an annual 0.15 percent fee on a company’s liabilities, excluding insured deposits, and would be assessed on banks, insurance companies and other financial firms with at least $50 billion in assets.

The goal is to offset projected losses of about $117 billion from the $700 billion Troubled Asset Relief Program, or TARP. About 60 percent of the fee would be raised from the 10 largest financial firms, among them some of the biggest names from the financial crisis, including Bank of America, Citigroup, Goldman Sachs Group, JPMorgan Chase & Co. and Morgan Stanley.

But most of the large recipients of bailout money have repaid all of their infusions, and the Treasury Department has projected a profit from the TARP program that injected money into banks because of payments from dividends and stock warrants.

The tax, which would begin on June 30, would be assessed on firms that have repaid their money and some that never received any bailout. It would not be assessed on automakers General Motors Co. and Chrysler Group, which have received about $64 billion in bailout money and are projected to account for a large share of the losses. Such a fee would be logistically difficult to impose on a manufacturing company, according to a senior administration official.

The administration also is spending about $50 billion of TARP money on its plan to offer incentives to banks to modify home mortgages to reduce foreclosures. That program’s cost is included in the projected losses for TARP.

Large banks said asking them to make up the TARP shortfall is unfair.

“Two-thirds of the TARP investment from banks has already been repaid with a large profit to the taxpayer,” said Steve Bartlett, president of the Financial Services Roundtable, a trade group of large financial firms. “This proposed tax will do nothing more than stifle economic recovery and encumber more pressing concerns, such as covering new regulatory costs. ... This tax is strictly political.”


patrickj 8 years, 4 months ago

Well done Mr. President! Well done! I can't help but also feel like it would be a good idea to see what kind of fee could be imposed on those exorbitant bonuses.

leedavid 8 years, 4 months ago

Whoa! Didn't the president just state the banks are paying their loans back plus interest as a sign the economy was recovering?

Why yes he did and from the article: "The tax, which would begin on June 30, would be assessed on firms that have repaid their money and some that never received any bailout."

So president tough guy.....we are already getting every dime we are owed, plus interest. We are actually making a profit off TARP. So why all the tough talk?

Here is a good bet. If you raised the taxes on a company that has paid the loan plus interest, how many think that company is going to be able to create jobs and lower the unemployment rate?

Flap Doodle 8 years, 4 months ago

Dear Leader's working on his next Order of Lenin.

Psalms20 8 years, 4 months ago

How would you teach this in a classroom to our kids? I would love to be a fly on the wall for that one!

Obama is overstepping his role! he has no place trying to enforce this, it makes zero since!

If anything, GM and Chrylser should be fined! make a product, try to sell the product, cant sell the product, run the company poorly, get bailed out by the taxpayer, no penalty! brilliant !!!!

Richard Heckler 8 years, 4 months ago

What got us to this point?

All of this began to unfold in 2004 when homes began to lose value and repos were increasing rapidly by 2007

Paulson and Bernanke go to Congress to present a rescue plan to congressional leadership. "If we don't do this, we may not have an economy on Monday," warns Bernanke. Sept 18 2008

The Bush/Cheney Home Loan Scandal

About the bail out money?

Bottom line is that the government better take the bull by the horns and begin setting up nationalized industries. IF anyone wants the USA to be a serious part of the world economy again.

LOCAL,state and federal level politicians are feeding us a lot of apple pie about their rosy projections for late 2010. The world of economists see it very differently. Wonder who's right? Politicians and the Chamber of Commerce have become used car salesmen.

Without a means for america to make money there can be no substantial economy as we have all known it. It is time to stop messing around. It is time to start creating jobs for people to make money. Corporate america will not do it.

Frontline tells it like it was....

Will the big banks respond to this fee? Take a look at your new bank fees in the next few months.

Richard Heckler 8 years, 4 months ago

Remember folks big banks make tons of profit using YOUR money. Lawrence has several big bank affiliates.

Do yourself and YOUR community a favor. Move your money to a local credit union or actual local bank( maybe only one in Lawrence).

Take the pledge to Move Your Money! In the past week, Move Your Money evolved from a New Year's Resolution into a national movement.

Press coverage spans the spectrum from mainstream outlets to advocacy blogs and progressive organizations -- from Dissident Voice and Democracy Now! to the Los Angeles Times, Newsweek, CNN's Rick Sanchez and MSNBC's "The Ed Show".

Press coverage hardly captures the whole movement, however. Across social media sites like Facebook, YouTube and Twitter, a surge of grassroots organizing is showing how Americans are making the Move Your Money initiative their own.

Just minutes after Arianna Huffington announced the campaign, Facebook users became fans of the project -- over 7,000 in seven days -- and started sharing their stories through the Move Your Money fanpage as well as the Huffington Post page.

Facebook user Carol Merrill commented on her experience:

Reclaimed all my money from Chase & moved to Schools...very happy with the move. It's like going to Cheers...everyone knows my name!

Others are taking even greater initiative on Facebook by starting specialized groups centered around the Move Your Money campaign. Nearly 500 people have organized around an initiative started by conservatives and libertarians who advocate for the campaign in a Facebook group, Time to Bailout From the Bailout Banks & the Dollar.

The group's description reads:It is time that Americans began to vote with their money and tell the Wall Street bailout banks & the Federal Reserve paper dollar where to go...

Yes, we agree with Gary North and Arianna Huffington to move your funds out of the bailout Wall Street banks and financial institutions as this and future generations will be saddled with this illegitimate debt and drain on the American economy for decades to come.

Richard Heckler 8 years, 4 months ago

The big banks pay no attention to elected officials. They fund their campaigns.

Move your Money Project on Facebook

How to Move Your Money

Money in local small banks actually make more money available to the local community and small business people.

Yes I do like credit unions.

Godot 8 years, 4 months ago

Targeted, specific, punitive- bill of attainder, the tool of a tyrant.

monkeyhawk 8 years, 4 months ago

"Alinsky summarized it this way: "Pick the target, freeze it, personalize it, and polarize it…. [T]here is no point to tactics unless one has a target upon which to center the attacks."[47] He held that the organizer's task was to cultivate in people's hearts a negative, visceral emotional response to the face of the enemy. "The organizer who forgets the significance of personal identification," said Alinsky, "will attempt to answer all objections on the basis of logic and merit. With few exceptions this is a futile procedure."[48]

Alinsky taught that in order to most effectively cast themselves as defenders of moral principals and human decency, organizers must react with "shock, horror, and moral outrage" whenever their targeted enemy in any way misspeaks or fails to live up to his "book of rules."[78]

Moreover, said Alinsky, whenever possible the organizer must deride his enemy and dismiss him as someone unworthy of being taken seriously because he is either intellectually deficient or morally bankrupt. "The enemy properly goaded and guided in his reaction will be your major strength," said Alinsky.[79] He advised organizers to "laugh at the enemy" in an effort to provoke "an irrational anger."[80] "Ridicule," said Alinsky, "is man's most potent weapon. It is almost impossible to counterattack ridicule. Also it infuriates the opposition, who then react to your advantage."[81]

According to Alinsky, it was vital that organizers focus on multiple crusades and multiple approaches. "A tactic that drags on too long becomes a drag," he wrote. "Man can sustain militant interest in any issue for only a limited time … New issues and crises are always developing…"[82] "Keep the pressure on," he continued, "with different tactics and actions, and utilize all events of the period for your purpose."[83]

Boston_Corbett 8 years, 4 months ago

Marion (Marion Lynn) says…"This article, with all of its hypocrisy is enough to cause me to consider to having my profile removed from the LJW"

Promises, promises....

What taxes does an illegitimate "guerilla internet" marketer pay anyway, when he lives in a relative's basement rent-free.

tomatogrower 8 years, 4 months ago

"Here is a good bet. If you raised the taxes on a company that has paid the loan plus interest, how many think that company is going to be able to create jobs and lower the unemployment rate?"

Let's see them create jobs first, then get a tax cut. I know that you think these businesses are wonderful patriots who care about the long term stability of the US economy, but so far I don't see any evidence of it. Tax them to the hilt, then lower their taxes as they create jobs. Tax cuts do not and have not trickled anything down, unless you count the servants. And all the caterers who were paid a lot to put on million dollar birthday parties. Get a clue, they are only interested in their own decadent lifestyle. Threaten that, then they might start creating wealth for our country. Jobs, then tax cuts.

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