I simply don’t know what to say.
The simple ignorance of Mr. Obama and his administration, and their lack of knowledge regarding the economy, is staggering and frightening.
The Obama plan is the latest in a slew of proposed fees, penalties and constraints the White House envisions slapping on Wall Street during the cleanup of the U.S. financial crisis, and marks a new stage in the White House’s populist assault on the finance industry. If approved by Congress, the new tax — which the White House calls a “financial crisis responsibility fee” — would force about 50 banks, insurance companies and large broker-dealers to collectively pay the federal government roughly $90 billion over 10 years. Of the 50, about 35 would be U.S. companies and 10 to 15 would be U.S. subsidiaries of foreign financial firms.
Administration officials went out of their way Wednesday to show no sympathy for big banks they acknowledged would lobby hard against the proposal. “The banks that are in question were significantly responsible for the enormous degree of the reckless risk-taking that was borne throughout the economy,” one official said.
But that is just it…many of the banks that are being targeted neither wanted help from TARP in the first place, nor owe much to TARP at the current time. In fact, the majority of the banks that would be taxed are the ones that were least affected by the credit crisis: Goldman Sachs, J.P. Morgan Chase, and Morgan Stanley, and even include financial institutions such as General Electric.
The taxed firms are expected to pay the cost of bailout money that went to AIG, General Motors Co. and Chrysler LLC, which are exempt from the tax. The administration official defended the omission by contending that U.S. auto makers collapsed in part because of a financial crisis of the banks’ making.
The idiocy of this is quite remarkable. First, I am the last person to defend the banks, who clearly were at the heart of the recent financial crisis, along with the government. That said…why punish those that were least responsible? The majority of the taxes target firms that, have in fact, paid back taxpayer funds. And those that hold the largest amount of taxpayer loans to this day, especially AIG, are exempt? What sense does that make?
Additionally, one of this White House’s major criticism of the banking industry is their failure to increase credit availability. How will decreasing their funds help in that respect?
And maybe the most important point of all: where do you think these tax dollars are going to come from? They will come from citizens like you and me. These bankers are many things, but are not stupid. They will simply increase their dues from shareholders and clients, and make up the shortfall. Ultimately, this is a tax on you and me.
This is not to say that serious reform of the banking industry is not needed. It certainly is. But the Obama Administration has bypassed the hard work it will take to reform the system, choosing instead for the cheap political trick of a punitive tax against these firms. It is simply idiocy on a presidential level, at a time that we need real rational leadership of the economy.