Is the White House Banking on a Financial Industry Tax?

I can’t imagine that this looked all that good on paper… Apparently, in an effort to recover the TARP money from banks and other groups that the White House is anticipating won’t actually be paid back to taxpayers, they’re going to tax the banks, who will likely pass along the tax to taxpayers – to make sure that taxpayers get paid back.

Don’t read it again. It won’t make sense then either.

You see, last month, Treasury Secretary Geithner admitted that the taxpayers are probably going to lose out on TARP – to the tune of $41.4 billion. He told an investment panel that some of the TARP payments would not be recovered including “a significant likelihood that we will not be repaid for the full value of our investments in AIG, GM and Chrysler.”

So lucky for us that when TARP was created, part of the deal was that the President would look at ways to get money back if it wasn’t going to be paid back on time – cause it’s just that easy. This was, ostensibly, to keep the deficit from getting worse.

It’s now two years later. Bonuses are back, Wall Street is feeling flush, everyone is happy – except for the White House. They’re looking at a hole in the budget that’s not going away and wondering what to do with it. Despite that magic “payback” provision that Congress wisely incorporated in the bill, there’s no clear way out.

Rumor has it that the White House is now considering a “financial industry tax” to bail out the bail out. It’s brilliant, isn’t it? It would be a tax on financial institutions to protect taxpayers from bank rescues. Too bad the UK didn’t think of it first. Cause that would be totally embarrassing, wouldn’t it? Especially if we told them that it was a stupid idea and it would put a halt to growth in the financial sector and that we wouldn’t support it… unless, of course, we could package it differently and spin it as our own idea. *Whew* I’m glad we don’t have to worry about that.

Notwithstanding the wisdom of asking banks that are back to giving billions of dollars in bonus money to their top execs to dip into their profits to pay for those that aren’t doing so well, calling it a tax isn’t going to win any points with taxpayers. You and I both know that such a tax will eventually make its way to consumers.

But before you get too giddy about what feels like an Obama tax-athon, there’s enough blame to go around. The Bush administration saw this “what if they can’t pay it back?” issue coming a mile away when the money was handed over in the first place. Sadly, if anyone is really to blame, it’s us, the taxpayers, for putting up with this nonsense. We’ve sat back now for two years as if we’re powerless to stop these handouts – only we’re not. There’s an election next year, remember?

Comments

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  2. chad

    Wow, I thought that Obama might ACTUALLY be smarter than Bush. I guess that serves me right for thinking.
    So, I’ll reiterate: The banks become a bit too liberal in their issuing of loans to people who are getting greedy in consumerism. The people get in over their heads and the loans fall through. The banks take what they can and everyone cries foul.
    The federal government comes in and writes a blank check with the taxpayers guarantee. The banks take it and their exec’s take some off the top (paying themselves first) and use the rest to cover their losses as they can. Then the government expects any form of repayment NOT to trickle down to the consumer? When can I start laughing again? I thought these people had some edumakasions frum collij!

  3. Pingback: Bankers Lawyer Up to Fight Tax | taxgirl

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