American International Group is in; U.S. automakers are out. The exclusion is likely to spark calls that the tax is unfair, forcing financial firms that paid back their TARP money, with interest, to pay for the failure of the automakers.
– Also out are Fannie Mae and Freddie Mac, the government-sponsored enterprises that currently play a role in funding three-quarters of all American mortgages. The government controls 79.9 percent of the firms, and the senior official said that given the “extraordinary circumstance they are under at least as they are currently organized it would not be productive to the taxpayer to apply this fee.”
– The fee would equal about 15 basis points of a firm’s qualifying liabilities, which would exclude deposits or reserves assessed by another regulator. The qualifying liabilities would be determined by the firm’s regulator, and the fee collected by the Internal Revenue Service.
– Under the legislative proposal being drafted by the administration, the fee would last a minimum of 10 years, but would extend longer if all TARP losses had not been covered. The Treasury Department believes that 10 years – and the $90 billion collected over that time period – should be enough to cover all TARP losses. But the president’s 2011 budget will include a projected TARP loss of $117 billion since the administration is using its most conservative estimates in that document.
Read more: http://www.politico.com/news/stories/0110/31489_Page2.html#ixzz0cbfLx4ha
Then it only makes financial sense for the banks to stop loaning money and buy more government debt bonds.
printing presses have got to be melting down.