Obama Finally Attacks the Banks

Eddie Braverman's picture
Eddie Braverman - Certified Professional
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Either buckling to populist pressure or finally showing his true colors, President Obama revealed a plan to tax the largest banks in America to recoup up to $120 billion of the bailout money doled out over the past year. Catching banking lobbyists flatfooted, the proposal from out of left field is set to hit Congress next month.

Most likely, it will be a tax on profits much like the windfall profits tax bandied about during the oil run-up a couple years ago. Alternately, it could be a tax on the loan activity of the largest banks. At a time when banks are being encouraged to loan money to small business, in fact when banks are being scolded by the President to do so, it seems disingenuous to set up a tax on the very same criteria. But here we are.

I think we can expect the proposal to gain some traction in Congress as well. The Dems are against the ropes going into the mid-term elections, Barney Frank has already admitted that he's known something like this was in the works, and nothing panders to a pissed off public like punishing Wall Street.

I guess where I have the most difficulty with this is figuring out the math. If you have the Federal Reserve giving away the house with zero percent interest rates and encouraging "bank holding companies" (GS/MS/et al) to borrow Fed funds for prop trading, how do you turn around and slap a tax on the excess profits from those already tawdry associations?

While Obama has publicly shunned extraordinary taxes on executive compensation, don't be surprised to at least see a bonus tax proposed. For lack of a better word, that type of tax was "successful" in Britain, and the pogues in DC might think that it just might fly here. Nothing is out of bounds.

Comments (11)

Jan 12, 2010

Just when I thought this government couldn't get anymore incompetent. It really baffles me how such a large group of idiots managed to come to power.

"I do not think there is any other quality so essential to success of any kind as the quality of perseverance. It overcom

Jan 12, 2010

Funny, I thought something similar during this whole crisis, but mostly about the big banks.

Jan 12, 2010
yomomma:

Funny, I thought something similar during this whole crisis, but mostly about the big banks.

You wouldn't understand.

"I do not think there is any other quality so essential to success of any kind as the quality of perseverance. It overcom

Jan 12, 2010

I, in fact, do understand. And each percentage of a bonus tax is a percentage of my personal income (adjusted for the base of course). The larger point has already been made, this is a populist move. You may be underestimating the response of a populace at 10% unemployment reading about record bonuses for bankers. Obama is not.

Do you think these "idiots" in the government should have not bailed out the banks to begin with?

Jan 12, 2010

Let's see if it passes. Sometimes, people propose things to look tough to the public, even though they know/hope it won't pass. I'm not saying it is one of these cases, just that it might be. Gotta love politics!

Jan 12, 2010

I think it's fair for the government to recoup the bailout money but the options put forward aren't the right way to do it, and this isn't the right time.

Jan 12, 2010

Das Kapital in the flesh.

Jan 13, 2010

honestly its like Obama wants to bankrupt the country...oh wait.....I may hate my father's conspiracy theory-esque take on this situation but it does seem similar

http://en.wikipedia.org/wiki/Cloward-Piven_strategy
Aka. Bankrupt the country, make the new poor think they are entitled to benefits (such as unemployment is thought of as now), overload the current system, replace it with a redistribution of income to "destroy" poverty

Utterly retarded but from what I've seen of our friend B. Hussein Obambi I would expect it

Reality hits you hard, bro...

Jan 13, 2010

Alternately, it could be a tax on the loan activity of the largest banks. At a time when banks are being encouraged to loan money to small business, in fact when banks are being scolded by the President to do so, it seems disingenuous to set up a tax on the very same criteria. But here we are.

Also, idiot who are like "the banks are just mean and hate hard working americans...what BS. Who are they...nancy Grace??? Probably. But regulations themselves- not lack thereof- is what is perpetuating the crisis. Capital requirements are honestly one of the most retarded implements that the global regulatory community has perpetuated. Due to the loan rates increasing=more foreclosures=a lot of banks assets are in hard, illiquid, assets, more foreclosures=lowering housing prices=asset values in banks fall=Available capital lowers. Without a certain amount of capital it is ILLEGAL for the banks to lend, you do not get capital from borrowing from the Fed

More regulations are mo' bitches

Reality hits you hard, bro...

Jan 13, 2010
Jan 13, 2010

Reality hits you hard, bro...