Dow
     -89.23
12801.23
-0.69%
 |
S&P 500
     -9.31
1342.64
-0.69%
 |
Wil 5K
     -108.90
14000.51
-0.77%
 |
Nasdaq
     -23.35
2903.88
-0.80%
 |
EAFE
     -1.03
53.27
-1.90%
 |
OPEC Oil
     +1.09
116.27
+0.95%
 |
10Y Yield
     +0.01
2.01
+0.42%
Econwatch
January 11, 2010 4:17 PM

Obama Considers New Bank Fee to Reduce Deficit

By
Daniel Carty
Topics
Banking
(CBS/iStockPhoto)
Faced with an American public still seething over exorbitant bank bailouts, President Barack Obama is looking for ways to reclaim taxpayer money.

According to a New York Times report Monday, Mr. Obama's budget – set to be released in February - will likely included a proposed fee on financial firms that would help reduce the federal deficit.

Banks wrapped up a generally stellar year, posting healthy profits after the government provided them with billions of dollars in emergency aid. Now, these same banks are poised to spend billions more on employee bonuses – a fact that will almost certainly create a public backlash at a time when unemployment still hovers at 10 percent.

In that climate, the White House is trying to craft a policy that satisfies the American public and international partners eager for stricter controls over banks.

As the Times notes, the European Union has called for a transaction tax in December, echoing a similar proposal offered by U.K. Prime Minister Gordon Brown at the G-20 summit in November – a measure designed to stockpile revenue for any future necessary bailouts. Britain and France have separately called for heavy taxation of executive bonuses.

The U.S. has resisted these measures, saying a transaction tax would simply be passed along to consumers and bonus taxes could be circumvented. Mr. Obama's challenge is to find a meaningful policy that would both restore federal coffers and promote corporate responsibility.

Many financial institutions, including Goldman Sachs, have tried to mitigate the furor by paying out a greater portion of bonus money in deferred stock. But rhetoric from public officials remains heated.

White House Council of Economic Advisors chairwoman Christina Romer said Sunday that the bonuses were "ridiculous" and predicted they would "offend the American people."

And former New York Gov. Elior Spitzer blasted U.S. banks, telling CBS' "The Early Show" Monday their profits were built solely on taxpayer-funded bailouts. "They believe they are entitled to these crazy sums of money," Spitzer said. "It is inequitable, it is wrong."


Add a Comment See all 14 Comments
by nowhiningallowed January 12, 2010 11:36 AM EST
What about the egregious salaries and bonues being paid out to executives at Fannie and Freddie? They are no different than those on Wall St. the president is trying to target and make as an example.
Reply to this comment
by obie99sk January 12, 2010 9:42 AM EST
I agree PDXdave doesn't know what socialism is. In socialism all companies are owned by the goverment and everyone works for the goverment. Unregulated capitalism is just as bad because without regulation greed and profits drive companies to take risk they should not take which is why we are where we are today.

Regan started the drive to de-regulate everything and let the 'market forces' work on thier own but obviously these large companies need regulation. I pray that Congress passes something to return some controls to these companies because the sure haven't learned anything from the problems they've caused.
Reply to this comment
by sjc_1 January 11, 2010 8:01 PM EST
If they put a 1% fee on all stock transacted we would have NO deficit. If the phased out the mortgage interest deduction we could afford healthcare for everyone.
Reply to this comment
by SocietysNightmare January 11, 2010 9:31 PM EST
(LOL) You live in America! This fee will be passed on to consumers just as sure as "heinies" point to the ground. Most bloggers here just don't get it. BANKS control the money, not the government. So we have no choice but to play their way until A President & Congress comes along who are not as concerned about getting re-elected. Doubt I'll see a government like that in my lifetime.
by sjc_1 January 12, 2010 1:38 AM EST
How is a 1% fee going to be passed on to the consumer? I know you people keep repeating the same thing, that the consumer pays for everything. I do not see how a fee on each share of stock sold is going to be passed on to every consumer.
by catcarey January 11, 2010 7:45 PM EST
if the banks are going to get a bonus I feel that as a credit card holder my interest rate should be back down to 9.9% as it was before the crisis. I have never been late on my credit card bill but yet bank of america decides to increase the credit card rate to ALL members to 12.99% and up. I hope president Obama is able do something to stop the banking industry from getting bonuses with out it coming back on the little people.
Reply to this comment
by PacificGatePost January 11, 2010 6:50 PM EST
. . . PATHETIC, in the meantime, . . . .

WHERE IS AMERICA?S LEADERSHIP?

America still waits for promises of speeches, given during the most expensive Presidential campaign in history, to materialize into actions that will be positive for a Nation facing unprecedented debt, deficits and unemployment.

America is still looking for a leader.

http://pacificgatepost.com/2010/01/america-waits-for-leadership.html
Reply to this comment
by markj2 January 11, 2010 5:42 PM EST
Howmis he going to make sure any taxes imposed on Banks isn't passed on the comsumers? Do you really think that the fat cat bankers as he called them are going to forgo huge bonus's and make reasonable profits. We should never have bailed out any bank and allowed them to fail,especially if they took risky investments and make risky loans. It was Congress, both rupublican & democrat's that forced banks including Fannie & Freddie to make risky home loans to people who couldn't afford them,yet Congress to cover there own azz & agree'd to bail them out without the peoples ok and at our expense in using tax payer dollars.
Reply to this comment
by cidaia January 11, 2010 6:57 PM EST
What makes you think he cares whether his fees get passed onto consumers?
by unionite January 11, 2010 5:38 PM EST
That idiot below doesn't even know what "socialism" means. Just another true dummy following what other Republican dummies tell them to say. Then they all look stupid and dumb. But then, that's life as a Republican anyway.
Reply to this comment
by mary-miami January 11, 2010 5:06 PM EST
President Obama is right. He says to charge the banks a fee and I agree but I also say tax these rich banker CEOs to the max. Remember the private jets and spas? They were raking in bonuses and laying people off. It's time they paid more taxes. While we're at it, we should have the minimum wage increased to a living wage of $10 an hour.
Reply to this comment
by nowhiningallowed January 12, 2010 11:40 AM EST
You seem to ignore the fact that Congress was playing around at the expense of the taxpayer having their retreats at luxury resorts and spas. And, where's your whining about what Congress did by going en masse to Copenhagen for a free luxury spree and vacation at the expense of the taxpayer? And, where's your whining about the egregious salaries and bonsues being paid to executives at Fannie and Freddie, both of which contributed greatly to the economic crisis, while getting bailout money from the taxpayers? And, where's your whining about the Obama $21B stimulus to supposedly reduce the rate of employment and now it's being reported that it had virtually no impact whatsoever?
by pdxdave January 11, 2010 4:55 PM EST
This "fee" (aka tax) will just be passed on to the consumers, and further degrade the pensions of retirees who already live on a razor-thin income.

Socialism sucks.
Reply to this comment
See all 14 Comments
.

Follow Econwatch

Scroll Left
Scroll Right More »
CBS News on Facebook
  • Building You a Better Morning

  • CBS This Morning

    "CBS This Morning," anchored by Charlie Rose, Gayle King and Erica Hill, airs weekdays from 7 to 9 a.m. ET and at the same time in other time zones.
    Learn more...