President Barack Obama has proposed levying a fee on large financial firms and banks to pay for the costs of the financial bailout.
The fee would be in place for at least 10 years and would go into effect on June 30, 2010. It aims to raise up to $117 billion to pay for the projected remaining cost of the Troubled Asset Relief Program.
The proposed fee would be levied on the debts of financial firms with more than $50 billion in consolidated assets to provide a deterrent against excessive leverage. By levying a fee on the liabilities of the largest firmsexcluding FDIC-assessed deposits and insurance policy reserves, as appropriatethe Financial Crisis Responsibility Fee would largely fall on firms that have taken on the most debt. Over 60 percent of revenues will most likely be paid by the 10 largest financial institutions.
My commitment is to recover every single dime the American people are owed, said Obama. And my determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at the very firms who owe their continued existence to the American peoplewho have not been made whole, and who continue to face real hardship in this recession. Thats why Im proposing a Financial Crisis Responsibility Fee to be imposed on major financial firms until the American people are fully compensated for the extraordinary assistance they provided to Wall Street.
Many of the financial firms that would be subject to the levy have already paid back their share of TARP money, but the administration believes they will continue to benefit from the financial bailout.
If the costs of the TARP have not been recouped after 10 years, the fee would remain in place until they are paid back in full. The proposed fee is expected to raise $117 billion over about 12 years, and $90 billion over the next 10 years.
The financial services industry reacted with dismay to the proposed fee and is expected to lobby Congress to oppose it. Two-thirds of the TARP investment from banks has already been repaid with a large profit to the taxpayer, said Steve Bartlett, president and CEO of the Financial Services Roundtable, which represents 100 of the largest integrated financial services companies. This proposed tax will do nothing more than stifle economic recovery and encumber more pressing concerns, such as covering new regulatory costs.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access