President Barack Obama’s message to banks on Thursday was simple. “We want our money back,” he said, during “a brief appearance with advisers at the White House,” the Associated Press reports.
“We are already hearing a hue and cry from Wall Street, suggesting that this proposed fee is not only unwelcome but unfair, that by some twisted logic, it is more appropriate for the American people to bear the cost of the bailout rather than the industry that benefited from it, even though these executives are out there giving themselves huge bonuses,” Obama said.
The president continued, “What I’d say to these executives is this: Instead of setting a phalanx of lobbyists to fight this proposal or employing an army of lawyers and accountants to help evade the fee, I’d suggest you might want to consider simply meeting your responsibility,” Obama said.
Original AFP report follows
President Barack Obama will Thursday unveil a 90 billion dollar fee on 50 top finance firms to recoup taxpayer dollars used to bail out Wall Street, which is blamed for igniting the economic crisis.
The proposal, to be included in Obama’s next budget, will be rolled out as many of the firms rescued by public funds gear up to announce huge bonus payouts to top executives at a time of economic misery and high unemployment.
The scheme is designed to raise 90 billion dollars over 10 years for the public finances, a senior US official said on condition of anonymity.
Obama is determined to prevent Wall Street firms going back to business as usual and resuming high-risk lending practices and huge bets on mortgages and other instruments he blames for igniting the financial crisis.
The title of the initiative, the “Financial Crisis Responsibility Fee,” makes it clear the administration is placing blame on the financial industry for the worst economic meltdown since the 1930s Great Depression.
Yet Valerie Jarrett, a senior adviser to the president, insisted that “we’re not trying to pick a fight” with banks.
“It’s a very solid solution to make sure taxpayers are made whole,” she told MSNBC television.
The Obama administration has repeatedly said it will try to recoup the full cost of the 700-billion-dollar Troubled Asset Relief Program (TARP) which was also used to bail out crippled automakers.
A senior US official said the program, which has seen some money already paid back, would now effectively leave the government around 117 billion dollars out of pocket.
“It is in many ways offensive for those at our major financial institutions to suggest they can today afford excessive, often outlandish bonuses for their top executives” but cannot repay taxpayers, the official said.
“We feel this is a workable fee, we feel it supports the goal of putting greater burdens and less incentives to excessive size and excessive leverage.”
But the Financial Services Roundtable, which represents 100 top financial services firms, said the fee was a “strictly political.”
“Two-thirds of the TARP investment from banks has already been repaid with a large profit to the taxpayer,” said the Roundtable’s President and CEO Steve Bartlett.
“This proposed tax will do nothing more than stifle economic recovery and encumber more pressing concerns, such as covering new regulatory costs.”
The administration’s proposal, which requires congressional approval, will apply only to firms with over 50 billion dollars in assets, according to the official.
It will cover around 50 firms, including 35 that are US-based and 10 to 15 which are US subsidies of foreign companies. It will last 10 years or as long as necessary to recoup losses under TARP, the official said.
No small or community banks will be covered by the plan, the official said, adding that the scheme was being put together in such a way as to prevent the firms passing on the costs to consumers.
Even though auto firms General Motors and Chrysler also got money from the TARP fund, they will not have to pay the fee, the official added, warning financial firms not to make an issue of that omission.
In addition, not all the firms that will be targeted by the fee actually received TARP funds.
“I don’t think that it would be wise for them to try to suggest that living up to the letter of the law is somehow an unfair burden on them,” the official said.
The cost of the fee levied on the financial firms will be assessed according to a formula looking at their liabilities, total assets and equity and tier-one capital.
A bank fee may help the White House channel public anger over big bonus payments on Wall Street, as Americans face the reality of 10 percent unemployment and a slow economic recovery.
According to a Treasury report to Congress published on Monday, the government had committed 545 billion dollars of TARP funds as of January 6.
Of that figure, 372 billion dollars have been disbursed. Banks have already repaid 165.18 billion dollars of those funds, leaving 209 billion dollars outstanding.
With the bonus issue likely to explode into political controversy, the US government made clear on Monday it had no intention of imposing a one-off 2009 tax on individual bankers bonuses.
Asked if the United States was planning to follow moves unveiled this week by Britain and France for “community” taxes on bankers’ bonuses, Treasury spokeswoman Meg Reilly said in an email: “Not at this time.”
This video is from MSNBC’s News Live, broadcast Jan. 14, 2010.