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.
Britain and France have already proposed a large tax on executive bonuses.
The blue-ribbon commission established by Congress last year will finally hold its first public hearing to investigate the 2008 financial crisis, writes Liz Moyer for Forbes. By mid-December, the Financial Crisis Inquiry Commission will publish its report as to the cause of the crisis. The sessions will include all the big financial and mortgage companies, securities analysts, economists and academics. U.S. Attorney General Eric H. Holder Jr., the Federal Deposit Insurance Corp.’s Sheila Bair and the Securities and Exchange Commission’s Mary Schapiro will also be making an appearance.
This investigation, like others before, occur after big shocks and help assuage public anger – they don’t often provide anything else.
For more information on banks, visit our financial category.
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Max Chen contributed to this article.
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