Obama outlines $117bn bank levy

[Genii Lodus]

Courtesy of the BBC

President Barack Obama has said Wall Street must repay $117bn (£72bn) to taxpayers and criticised banks for "massive profits and obscene bonuses".
The tax is to recoup money US taxpayers are expected to lose from bailing out the banks during the financial crisis.
"My commitment is to recover every single dime the American people are owed," the president said.
The move follows populist anger at banks, seen as being responsible for causing the recent economic crisis.
Average American
"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 people," the president said.
He said the aim was not to punish Wall Street firms but to stop abuses and excesses from happening again.

It's one more thing dragging on the sector, but it's spread over 10 years, so it's not so consequential. It's petty theft from bank balance sheets
Robert Albertson, chief strategist at Sandler O'Neill
The BBC's Michelle Fleury said the president had made clear "in strong language" that the banks must repay the taxpayer, through what is being dubbed a "financial crisis responsibility fee".
"It may go some way to quelling the anger of the average American," our correspondent said.
The tax would apply only to financial firms with assets of more than $50bn.
There are reckoned to be about 50 of these institutions - although many did not accept any taxpayer assistance and many others have already paid back what the government lent to them.
BBC Business editor Robert Peston said that the cost may be passed on to the banks' customers.
"The cost of borrowing might go up for companies who borrow from these banks," he said.
He said there might also potentially be a "one-off" squeeze on the US economy.
'Drag on sector'
In the US, analysts said the fact that the fees levied on banks would be spread out over a decade would diminish their impact.
"It throws some sand into the gears," said Robert Albertson, chief strategist at Sandler O'Neill in New York.
"It's one more thing dragging on the sector, but it's spread over 10 years, so it's not so consequential. It's petty theft from bank balance sheets."
The levy comes ahead of the latest reporting season on Wall Street, with banks expected to report record bonuses.
The tax will claw back some of the losses from a $700bn taxpayer bail-out of American banks known as the Troubled Asset Relief Program (Tarp).
It was drawn up in the midst of the financial crisis in 2008, following the collapse of US investment bank Lehman Brothers and multi-billion dollar rescue of insurance giant American International Group (AIG).
It helped stem the crisis by injecting public capital into the biggest US banks and restoring confidence in the banking system.

$117bn seems like a drop in the ocean given everything that was paid out and the banks stood to lose. Spreading it over ten years will further dilute the impact and I don't think it'll have any (positive) effect on bank's behaviour. Still it's something and I feel it's better than the UK government's ineffective attempt to tax bonuses which has seen banks pay out the same ridiculous amounts just in next tax-avoiding ways. I'd love to see one of the banks which didn't take TARP money protest in an interview and someone with balls point out that if the government hadn't intervened the entire sector would have collapsed and all banks are raking in money due to the current interest rates.

[Highlord Laan]

Spread over ten years?

No. They'd not let any of the people they screw over for profit have such a deal, so I see no reason why some bankers should be allowed to either.

[Big Phil]

Banks are still going to be screaming about this, even if it is spread over a decade. The real question is whether Republicans will raise a stink and try to block this.

[Genii Lodus]

If the US is anything like here the general public have a pretty much unanimous fuck the bankers attitude. It's only really the fact that all politicians across the world have proven themselves to be the bitches of the finance industry which has prevented any country taking touch action to prevent this kind of bullshit happening again. If it was up to the public in Britain I'm sure a lot of bank executives would have been hung up. Demented as some of the Republican's base is I think spinning 'let's try and charge the banks for helping them not go out of business' into 'OMG evil Obama is taking money away from our poor impoverished hard-working bankers' would be a tough sell. But then again I thought poor people who can't afford healthcare couldn't be made to think socialised healthcare was a bad thing.

[Big Phil]

For a lot of Republicans, Obama wants to this it = WRONG/EVIL/I MUST OPPOSE!

It'll get positioned as "socialist" or "punishing business for Obama's fuckups" or something like there, and there might even be teabaggers out rallying against it. Plus, once Limbaugh says something about it, all of his idiot listeners will jump on the bandwagon.

[J]

Awesome! The penalty is less than the amount which was funneled to the banks via AIG alone! Yeah, that'll stop them!
Collect $4-5 trillion in bailouts & guarantees, pay a $117 billion penalty, that's what, a 2.5% fine? Where do I sign up for this program?

[bobalot]

It's a start. Better than the current strategy of sucking the banking sectors balls at every opportunity.

[Lord MJ]

Meh. This will probably just be passed to the customer in the form of higher fees, so it will ultimately be taxpayers paying for this levy.

[Knife]

Meh. This will probably just be passed to the customer in the form of higher fees, so it will ultimately be taxpayers paying for this levy.

Move your money out of the big banks and into regional banks or local banks, or a credit union.

[KrauserKrauser]

Maybe they'll be able to borrow another 117 billion to cover this new expense.

Whoever thinks the banks are actually going to spending any of their own money on this is loony as hell.

Obama/Geithner have such a great track record of being able to control the banks....Right?

Definitely need to trust those guys, it's not like they've been naive to the point of idiocy in their handling of ever bank related policy so far or anything...

[Feil]

Looks like politics to me. A whole lot of nothing designed to make the Government look good and force the Opposition to make asses of themselves if they try to resist it.

[Count Chocula]

Oh looky, today's Five Minute Hate is against TEH BANKZ! But only the big ones, who (unwillingly or not) received bailout money and have to a large extent paid it back, with interest. It's a very small percentage (15 basis points for every $1,000 drawn IIRC); the part that confuses me is why it's also being levied on banks that did NOT receive ANY TARP funds. That's like putting every kid in class on detention because two of them were shooting spitballs, for fuck's sake. The banks getting hit with this tax or fee or king's tribute or whatever you want to call it will undoubtedly pay it by raising fees for some of their services to their customers, or by (for example) raising their fees for cashing other banks' checks.

I also notice that the Big O didn't say anything about a similar assessment for GMAC, GM, Chrysler, Fannie Mae, or Freddie Mac. Oh never mind, I forgot that there isn't a bankers' union [/sarcasm].

[J]

Oh looky, today's Five Minute Hate is against TEH BANKZ! But only the big ones, who (unwillingly or not) received bailout money and have to a large extent paid it back, with interest.

Except they haven't, not even close. They've paid back most of the TARP loans but what about the $100-150 billion which was funneled their way via AIG? What about the $1.2 trillion or so of worthless mortgage backed securities which they've unloaded onto the Fed & Treasury along with Freddie & Fannie in exchange for fresh money-good T-bills at the full face value of the MBSs? And a few hundred billion in T-bill give-aways via backdoor POMO auction buybacks for the Fed's Primary Dealers? When's all that money getting repaid?

[Knife]

Oh looky, today's Five Minute Hate is against TEH BANKZ! But only the big ones, who (unwillingly or not) received bailout money and have to a large extent paid it back, with interest. It's a very small percentage (15 basis points for every $1,000 drawn IIRC); the part that confuses me is why it's also being levied on banks that did NOT receive ANY TARP funds.

lol, like TARP was the only mechanism that paid out to banks. I'm sorry, but the FED handed out billions to trillions through multiple means, and a lot of the money to bail out AIG, got used to recoup bank money, in effect, paying the banks. Those saying that repaying the TARP is a drop in the bucket are right; however, a drop in the bucket is better than nothing since both sides of the political isle are bought and paid for by the big bankers.

Edit: Bah, J beat me by three minutes.

[Count Chocula]

^ (J & Knife) Since the Fed and House Finance Committees allowed the shenanigans surrounding AIG, and encouraged the growth of the MBS, and approved the arsenic-for-cinnamon swap of the bad debts for T-bills, I'm guessing it'll come out of the asses of us taxpayers...and out of the depreciated purchasing power of anyone stupid enough to keep buying Treasuries. TARP, and the "we're gonna get some of your skin!" attitude of the White House towards the banks, is a small part of the mountain of crooked shit. It is, however, the most visible and easily understood part, making the banks a perfect target for today's lesson in populist politics.

Year-end bank exec bonuses provided perfect fodder for Obama, Geithner, and little Bobby Gibbs to stir up some class envy as cover for another shakedown. OT, it also distracted attention away from the backroom health plan deal that exempts unions from a 40% tax on "gold-plated" health care plans, whatever those are. So yeah I think "Five Minute Hate" as Orwell described it is an apt term for the "get dem banks" rhetoric.

[Knife]

^ (J & Knife) Since the Fed and House Finance Committees allowed the shenanigans surrounding AIG, and encouraged the growth of the MBS, and approved the arsenic-for-cinnamon swap of the bad debts for T-bills, I'm guessing it'll come out of the asses of us taxpayers...and out of the depreciated purchasing power of anyone stupid enough to keep buying Treasuries. TARP, and the "we're gonna get some of your skin!" attitude of the White House towards the banks, is a small part of the mountain of crooked shit. It is, however, the most visible and easily understood part, making the banks a perfect target for today's lesson in populist politics.

Year-end bank exec bonuses provided perfect fodder for Obama, Geithner, and little Bobby Gibbs to stir up some class envy as cover for another shakedown. OT, it also distracted attention away from the backroom health plan deal that exempts unions from a 40% tax on "gold-plated" health care plans, whatever those are. So yeah I think "Five Minute Hate" as Orwell described it is an apt term for the "get dem banks" rhetoric.

So, the politicians on both sides of the isle the banks bought and paid for put forth the deregulation, and resist regulation, to allow them to loot the economy and your saying we need to only scorn the politicians? Are you really that fucking stupid? Yes, we should scorn and punish the politicians for rampant corruption that allowed the banks and Wall Street thieves to buy them and fuck up the system; however, we should not lose sight of who exactly did this. THE BANKERS.

[KrauserKrauser]

Right, they did it, and Obama is trying to act like this is SERIOUS BUSINESS to them! Really! 100+ billion! HUGE DOLLARS!!!

Completely ignoring the fact that they banks have so far been able to funnel money already borrowed, get return from the treasury and pay the government back with its own money and pocket the interest they made in the funnel.

Where is Obama recognizing the fact that they are doing this and actually growning a set of balls to stop it. Until then whatever claims "WE ARE HURTING THE BANKS! TAKING THEIR MONIES!!!" is bullshit as the banks will just use another end run and cost the tax payers money to settle everyones POPULIST RAGE!

How anyone (Other than the bankers and anyone else stealing cookies from the cookie jar) can support the man on this, I simply cannot understand.

[bobalot]

Right, they did it, and Obama is trying to act like this is SERIOUS BUSINESS to them! Really! 100+ billion! HUGE DOLLARS!!!

Completely ignoring the fact that they banks have so far been able to funnel money already borrowed, get return from the treasury and pay the government back with its own money and pocket the interest they made in the funnel.

Where is Obama recognizing the fact that they are doing this and actually growning a set of balls to stop it. Until then whatever claims "WE ARE HURTING THE BANKS! TAKING THEIR MONIES!!!" is bullshit as the banks will just use another end run and cost the tax payers money to settle everyones POPULIST RAGE!

How anyone (Other than the bankers and anyone else stealing cookies from the cookie jar) can support the man on this, I simply cannot understand.

People support him on this because while 100 billion is not the full amount, It's a start. I fail to see the point of your criticism. Are you suggesting the tax should be even larger?

[Knife]

Right, they did it, and Obama is trying to act like this is SERIOUS BUSINESS to them! Really! 100+ billion! HUGE DOLLARS!!!

Completely ignoring the fact that they banks have so far been able to funnel money already borrowed, get return from the treasury and pay the government back with its own money and pocket the interest they made in the funnel.

Where is Obama recognizing the fact that they are doing this and actually growning a set of balls to stop it. Until then whatever claims "WE ARE HURTING THE BANKS! TAKING THEIR MONIES!!!" is bullshit as the banks will just use another end run and cost the tax payers money to settle everyones POPULIST RAGE!

How anyone (Other than the bankers and anyone else stealing cookies from the cookie jar) can support the man on this, I simply cannot understand.

You have a point in that both sides of the aisle are bought and paid for; therefore, and regulation is going to make health care reform look easy, but while rampant corruption helped in this mess, the fact that the bankers did it is a good starting point on cleaning up the mess and it will have to be done either in baby steps or enough populace rage (as you put it) to do it in one fell swoop.

[KrauserKrauser]

I'm arguing that this 100 billion could just as easily be eleventy zillion dollars for all the impact that it will have on the banking industry. THEY AREN'T THE ONES THAT WILL BE PAYING IT, WE WILL, well maybe not you, I'm not sure what country you live in. I know that I will, my fiance will and whatever future kids we have will be suffering because Obama is FLAT OUT DISHONEST when it comes to his approach to the banking industry.

Reform would be extremely easy to implement if Obama let the bubble burst and allowed the Titans to fall by forcing valuations on their "assests" that are worth jack shit, because then the world would see rightly that our banking industry is bankrupt, bankrupt, bankrupt because they fucked themselves twelve ways to Sunday with their crazy bets on the bubble never bursting.

The economy would be fucked, there would be suffering galore but you know what no one cares and nothing will change until it impacts them. Obama and Co. are doing their god damn hardest to make sure that never happens and these useless sideshows to make Obama supporters think something is actually happening just amaze me with the rose colored glasses that are being used.

Instead we defund the FDIC and make these announcements of SERIOUS CONSEQUENCES!!!! for the banking industry that will have precisely jack shit impact on them as if you haven't read my previous posts, it won't cost them a FUCKING DIME, I'm betting their post another quarter of record profits off the free money they will make off this "bank levy".

I can't determine who the CEO of Bank of America is or what their policies, I can only speak with my pocketbook and elect people that will hold them to some reasonable standard. Instead we got Obama and he's the one of the two that I can impact the selection of.

[Knife]

I'm arguing that this 100 billion could just as easily be eleventy zillion dollars for all the impact that it will have on the banking industry. THEY AREN'T THE ONES THAT WILL BE PAYING IT, WE WILL, well maybe not you, I'm not sure what country you live in. I know that I will, my fiance will and whatever future kids we have will be suffering because Obama is FLAT OUT DISHONEST when it comes to his approach to the banking industry.

Reform would be extremely easy to implement if Obama let the bubble burst and allowed the Titans to fall by forcing valuations on their "assests" that are worth jack shit, because then the world would see rightly that our banking industry is bankrupt, bankrupt, bankrupt because they fucked themselves twelve ways to Sunday with their crazy bets on the bubble never bursting.

Instead we defund the FDIC and make these announcements of SERIOUS CONSEQUENCES!!!! for the banking industry.

I can't determine who the CEO of Bank of America is or what their policies, I can only speak with my pocketbook and elect people that will hold them to some reasonable standard. Instead we got Obama...

So, your answer is the Great Depression Mk II instead of the massive recession we've had the last year or two? Yeah, that wouldn't affect the tax payers...er citizens at all.

[KrauserKrauser]

Are you so sure that we are still out the woods? If I'm not mistaken most of the BS that was at the heart of this almost-despression is still present. It's not like the banking industry has actually made any changes in their business methods.

From what I can tell Obama has succeeded in basically rewinding the clock to almost pre-crash levels and praying that the bubble gum holding the dikes together will hold. While that might make people feel all cuddly, the foundation is still crumbling and so far his moves have not even come close to trying to address the core issues.

Sure status quo maintenance is the key role of a politician but thinking that this bank levy is actually going to do anything is just more evidence of the complete denial Obama supporters are in when it comes to his economic policies.

[bobalot]

I agree that the banking sector needs to be bitchslapped back into its place. I agree we shouldn't be giving them money at a very low interest rate while they loan it out at a higher rate and make enormous profits and give themselves bonuses.

Most of these banks should have simply been nationalised temporarily, directed to make reasonable profits and not hoard money, and then sold at a later date. (Which was done in Sweden when it faced a banking disaster.)

However your solution of "Great Depression 2" is quite frankly stupid. Do you have any idea how bad the great depression would be? The last great depression gave rise to fascism in Germany (and then World War 2), strengthened the militarists in Japan, gave communism legitimacy, caused civil unrest and social breakdown in every industrialised economy in the world.

Libertarians and Free-Market worshippers assume that if you let something like the great depression happen, eventually the market will cleanse itself of the bad operators and it will be fine eventually. They fail to take the social aspect into account. Society, government and the economy will be radically altered by poverty, unrest and social turmoil. There might not be the liberal free-market democracy they envision at the end of such a disaster.

[SirNitram]

On the bill itself: 117 Billion extracted via the ass of banks is better than 0 extracted via the ass of banks. That's all I can put forth.