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Bank Tax Gets Another Hearing

May 11, 2010

The Senate Finance Committee held the third in a series of hearings Tuesday on the proposed bank tax, which has garnered more support now that the Senate has agreed to drop the $50 billion resolution fund from the financial reform bill.

The $90 billion tax is intended to meet the goal of recovering the rest of the money that still hasn’t been paid back to the Troubled Asset Relief Program from banks and other financial institutions. The so-called “Financial Crisis Responsibility Fee” would apply to banks with assets of $50 billion or more that received government aid during the financial crisis.

Senate Finance Committee ranking member Charles Grassley, R-Iowa, has complained, however, that the tax would not apply to GM, Chrysler, Fannie Mae or Freddie Mac. Fannie Mae, in fact, has just asked for another $8.4 billion in aid from the government after reporting a first-quarter loss of $11.5 billion.

Grassley’s colleague, Senate Finance Committee Chairman Max Baucus, D-Mont., believes the tax needs to be put together carefully, especially as other countries also consider levying taxes on banks and financial transactions.

“As we continue examining the proposed bank tax as a means for repaying the American taxpayers, we need to carefully consider how we craft the most responsible policy for taxpayers and our economy,” he said. “We need to work to craft a policy that will fairly repay American taxpayers, reinforce American competitiveness and support small business lending.”

He thinks the U.S. version of such a tax could set an example for other nations. Lawmakers are worried about driving the financial industry away from U.S. shores to other countries.

On the other hand, many U.S. taxpayers these days wouldn’t mind a bit if Wall Street were to be relocated to some distant shore.

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