Taxing Banks to Pay for TARP: Just Playing Politics
David C. John /
It is fun and politically profitable to attack banks and bankers, especially in the wake of a bailout program estimated to have cost American taxpayers some $150 billion. Given this, the plan floated yesterday by the Obama Administration to charge a “fee” (read tax) on financial institutions to cover losses under the TARP program is understandable. That doesn’t make it sensible.
The plan will do nothing to force those responsible for much of TARP’s losses — primarily AIG, General Motors, and Chrysler – to reimburse the Treasury one cent. That money is likely lost. It will, however, force firms that didn’t take bailout money – and those that took money but have already paid it back with interest, to subsidize the money losers.
Worse, it promises to do so in a way that is going to make the financial system less sound, and possibly even make it harder for ordinary Americans to save for retirement.