Bank Tax Poised to Return and Take a Bigger Bite

By Cheyenne Hopkins

Although House and Senate conferees stripped a proposed bank tax from the regulatory reform bill at the last minute, the fight over the issue is far from over — and the price tag may end up much higher for large institutions. President Obama has vowed to make a push for the tax after reform is enacted, and the total cost to banks could jump to $90 billion from $19 billion. Observers said that although lawmakers balked at the tax as part of the reform bill, it may have enough support to pass as a separate measure. But banking lobbyists said the issue remains in play.  An industry lobbyist said even though it was not included in the final conference version, the White House likely will continue to push for some type of tax. “I’m hard pressed to believe the administration will let this opportunity pass them by,” said the lobbyist, who spoke on condition of anonymity. Obama warned in his June 26 weekly address that the battle for the bank tax is not over, saying it was a priority after the financial services overhaul. “Beyond these reforms, we also need to address another piece of unfinished business,” President Obama said. “We need to impose a fee on the banks that were the biggest beneficiaries of taxpayer assistance at the height of our financial crisis — so we can recover every dime of taxpayer money.” Observers are split on whether the larger Tarp tax has much chance of being enacted. Karen Shaw Petrou, managing director at Federal Financial Analytics Inc., said the reform bill’s smaller tax proposal likely was removed because it was added at the last minute.

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