President Obama and the War on Banks
James Gattuso /
Forget the war on terrorism, the war on drugs, even the war on poverty. President Obama seems to have declared a new war, a war on banks. It was launched last week with the proposal of a “bank tax,” supposedly meant to get TARP bailout money back to taxpayers (although it would leave out firms such as General Motors that actually owe most of the money). It continued yesterday with the President’s proposal of new bank regulations — limiting what banks can invest in as well as limiting to total size of financial institutions.
There’s not much to recommend either proposal. Neither would do much to avoid another financial catastrophe. In fact, by limiting the scope and size of an institution’s investments, there’s a good chance that they would make the system less, not more, stable.
And it isn’t just the president’s opponents who are skeptical. Reportedly, Treasury Secretary Tim Geithner, along with White House economic advisor Larry Summers, fought hard internally against the proposals, arguing that they would unnecessarily damage the international competitiveness of the financial sector. But, they, apparently, were overruled.