President Barack Obama will on Thursday unveil a fee on 50 top financial firms, which each hold at least $50-billion in assets, to recoup billions of taxpayer dollars used to bail out the industry.
The proposal, to be included in Obama’s next budget, will be unveiled as many of the firms rescued by public funds gear up to announce huge bonus payouts to top executives at a time of economic misery and high unemployment.
The scheme is designed to raise $90-billion over 10 years for the public finances, a senior US official said on condition of anonymity.
Obama is determined to prevent Wall Street firms going back to business as usual and resuming high-risk lending practices and huge bets on mortgages and other instruments he blames for igniting the financial crisis.
The title of the initiative, “the Financial Crisis Responsibility Fee”, makes it clear the administration is placing blame for the worst economic meltdown since the 1930s Great Depression.
“It is in many ways offensive for those at our major financial institutions to suggest they can today afford excessive, often outlandish bonuses for their top executives” but cannot repay taxpayers, a senior US official said.
The Obama administration has repeatedly said it will try to recoup the full cost of the $700-billion Troubled Asset Relief Programme (Tarp), which was also used to bail out crippled car makers.
The official said that the programme, which has seen some money already paid back, would now effectively leave the government $117-billion out of pocket.
The administration’s proposal, which will need to be approved by Congress, will apply only to firms with more than $50-billion in assets, the official said.
It will cover about 50 firms, including 35 that are US-based and 10 to 15 which are the US subsidies of foreign companies. It will last 10 years or as long as is needed to recoup losses under Tarp, the official said.
No small or community banks will be covered by the plan, the official said, adding that the scheme was being put together in such a way as to prevent the firms passing on the costs to consumers. — AFP