Bonus season is coming around and lots of big bankers are likely to receive a fat check. This has spurred another round of public outrage and the government has taken steps to funnel away some of the money back to taxpayers. What may be good for taxpayers might not be good for banks and related exchange traded funds (ETFs), though.
President Barack Obama will try and get back as much as $120 billion of taxpayer money by taxing large banks, specifically, a tax on profits, reports Jackie Calmes for The New York Times. Basically, a levy will be devised to reduce the budget deficit, which would also discourage any future excessive risk-taking among financial institutions.
Banking lobbyists were perplexed by the White House’s decision, stating that financial institutions have been repaying the bailout money in full, including interest. Ddward L. Yingling, president and chief executive of the American Bankers Association, says that a tax would be “a hit on banks that will decrease their ability to lend.”
The bank fee will help recover some of the money taxpayers forked over to bail out the financial system, and Obama is expected to include the fee in his February budget plan, writes Daniel Costello for NPR. Some senior officials fear the taxes would ultimately be passed on to customers and altogether evaded by top bankers. The European Union has called for a global financial transaction tax and stockpiling revenues to fund future bailouts.