No justice, no peace, I suppose. ;-)
The president is proposing to tax the country's 50 largest financial institutions at a rate of 0.15 percent of what the administration is calling "covered liabilities," or assets minus things like common stock. It is expected to generate $117 billion over 12 years, and would go toward costs associated with the bailout of financial firms and car companies. "We want our money back, and we're going to get it," Obama said. But the firms with the closest ties to Main Street -- banks like Citigroup, JPMorgan Chase and Bank of America -- will bear the brunt of the tax hit, while Goldman Sachs, arguably last year's poster child for Wall Street avarice, will pay less. According to an analysis by FBR Capital Markets, Citi would be on the hook for a $1.5 billion tax, while JPMorgan's hit would be $1.38 billion and BofA's would be $1.25 billion. Goldman, meanwhile, would face a tax of $767 million and Morgan Stanley's would be $644 million. A Morgan Stanley analysis estimated the tax, proposed to go into effect June 30, could reduce banks' bottom line by 5 percent this year. Several Wall Street bankers referred to the fee proposal as "unfair" and openly doubted that it would pass through the Senate. "This is all a political attack on Wall Street bankers who have already paid back TARP and don't owe anyone anything else," said one bulge-bracket banker. Added another Wall Street insider: "Obama's tax scheme is simply a disingenuous move to gain public favor on the back of an industry that helped him take office." And the repercussions of Obama's Wall Street tax may affect more than banks' bottom lines. For starters, critics say the tax will discourage banks from doing the very thing the administration has been strong-arming them to do: lend. That's because the more a bank lends, the higher the assets subject to the tax. The tax could also keep banks from merging, particularly during another financial crisis like this past one, during which JPMorgan acquired Bear Stearns and Washington Mutual and Wells Fargo bought Wachovia. It could also threaten US banks' ability to compete with overseas rivals. "This plan is ultimately going to cause the industry to contract and force banks to shrink," said Richard Bove, an analyst at Rochdale Securities. ..... President Obama's plan to defray the cost of the Troubled Asset Relief Program by taxing banks on their liabilities is likely to backfire, throwing an already-bruised economy into deeper turmoil and not severely dinging the firms widely seen as the greediest.