Obama plan to tax large financial firms designed to pay for TARP losses

By Binyamin Appelbaum


President Obama proposed a new tax Thursday to collect an estimated $90 billion over the next decade from 50 companies that he called responsible for driving the nation into economic crisis. The president said that the renewed profitability of large banks, and their plans to reward employees with billions of dollars in bonuses for 2009, underscored that firms were now sufficiently healthy to reimburse the government for its massive rescue efforts. “We want our money back and we’re going to get it,” Obama said. “If these companies are in good enough shape to afford massive bonuses, they are surely in good enough shape to pay back every cent they received from taxpayers.” But the plan must be approved by Congress, and it faces uncertain prospects in a closely divided Senate that may be reluctant to raise taxes ahead of the midterm elections. Some financial experts also were quick to criticize the idea as being unlikely to achieve its stated policy objectives. “The new big-bank tax is just like charging a nickel sin tax on a half-gallon of cheap liquor — it may make moralists feel good, but it doesn’t do much to stop bad behavior,” said Karen Shaw Petrou, managing partner of Federal Financial Analytics, which tracks regulatory issues for financial industry clients.