Obama Proposes Bank Fee to Recoup Bailout Costs
President Obama has just proposed a fee on financial firms, stating his commitment “to recover every single dime the American people are owed.” The measure, called the Financial Crisis Responsibility Fee, will only apply to the largest firms with over $50 billion in assets. The White House expects it to raise $117 billion over 12 years and $90 billion over the next ten.
CRFB commends the Administration for announcing a specific proposal to close TARP’s budget gap, and hopes that this move will further encourage lawmakers to make the tough decisions in coming months for deficit reducing measures.
In August, the Administration estimated that TARP would cost the government $341 billion, but more recent and conservative estimates put the total cost at $117 billion. The Emergency Economic Stabilization Act, the act that authorized the Treasury to create TARP, requires the President to submit a plan by 2013 “that recoups from the financial industry an amount equal to the shortfall in order to ensure that the [TARP] does not add to the deficit or national debt.” Today’s proposal shows an early commitment to recoup the losses.
The proposed measure would go into effect on June 30, 2010 and would institute a 0.15% fee on all covered liabilities (see the White House fact sheet here).
In other news, the Fed announced yesterday in the latest Beige Book that 10 of 12 Fed district banks reported improved economic conditions in their region since the beginning of December. The exceptions were the Philadelphia and Richmond Fed districts, who reported “mixed conditions.”