President Obama proposed Thursday a sharp increase in the taxes paid by the nation's largest financial institutions that he said would raise at least $90 billion over the next decade while constraining the industry's ability to take large risks and to collect what he described as "obscene bonuses."
The tax, which must be approved by Congress, is meant to make a splash, demonstrating to the public that the administration is now focused on reforming the financial industry after more than a year of bailout efforts. The nation's largest banks are expected to report large annual profits over the next week, along with plans to set aside billions of dollars for employee bonuses, a recovery made possible by massive federal support.
"We want our money back, and we're going to get it," Obama said Thursday. "If these companies are in good enough shape to afford massive bonuses they are surely in good enough shape to pay back every cent they received from taxpayers."
The bank industry experts are saying this will hurt the economy, because the banks will merely pass on the tax, called the Fiscal Responsibility Crisis Fee, to the consumers. I seriously doubt it will have a huge impact, because the fee is only being assessed against the mega-banks that took TARP money. Other banks will not be passing on that fee, since it won't be asssessed by them. Or as the Obama Administration says: ""Firms that raised prices would give smaller rivals a competitive advantage, creating an incentive for companies instead to swallow the cost, potentially by reducing employee pay."
The GOP will, of course, not be happy about this, but they'll have a hard time opposing it without being branded as "being in the pocket of the big bank fatcats"