Obama Weighs Bank Fee to Repay Bailout, Cut Deficit
The Obama administration is considering levying a new fee on financial institutions to help reduce the federal deficit and to recoup taxpayer dollars used to finance the $700 billion bank rescue.
According to a report first published by Politico this morning, the White House is likely to introduce the fee when it unveils its budget plans in February.
At a time when the nation’s unemployment rate is at 10 percent and Wall Street compensation packages for 2009 are on pace to surpass the record payouts of 2007, the White House is under increased pressure to crack down on Wall Street.
Some members in Congress have suggested taxing financial transactions as one way to help repay the Trouble Asset Relief Program. The 27-nation European Union has also called for a global transactions tax. Treasury Secretary Timothy Geithner has opposed the idea, however, arguing such a tax would simply be passed on to consumers.
Another option would be a tax on compensation packages at financial institutions, but administration officials fear such a measure could be too easily avoided.
Speaking to reporters Monday, White House Press Secretary Robert Gibbs said, “The president has talked on a number of occasions about ensuring that the money that taxpayers have put up to rescue our financial system is paid back in full.” As things stand, the Treasury Department estimates losses from the TARP could reach $120 billion.