Obama: I Will Tax You to Punish Banks (John Stossel)

Today President Obama will propose a new tax on the nation’s biggest banks, reports today's Washington Post. How will the tax work?

Firms would pay a "Financial Crisis Responsibility Fee" at an annual rate of $1,500 for every $1 million borrowed to finance lending and other activities.

In other words, the Obama Administration is going to punish those greedy banks by making it more expensive for you to borrow money. This is wrong on so many levels, it's hard to know where to begin. Let's start with a point made by Jamie Dimon, CEO at JP Morgan Chase:

"Using tax policy to punish people is a bad idea...All businesses tend to pass their costs on to customers."

Exactly. But don't worry, the Administration thought of that. They have a plan:

But by imposing the tax on only the largest firms, government officials said, they hope to protect consumers. Firms that raised prices would give smaller rivals a competitive advantage, creating an incentive for companies instead to swallow the cost, potentially by reducing employee pay.

Oh, now I see. They will only punish customers of big banks. If I run a small bank, this will now give me an incentive to stay small. I wonder how that will encourage lending.

Beyond that nonsense is the idea that they're "constraining the industry's ability to take large risks and reap outsize rewards". The only reason that banks reaped "outsize rewards" for taking bad risks is because the government encouraged them to do that by guaranteeing mortgage loans. Risk taking got wild when government protected risk takers from feeling the consequences of a bad risk.

Also absurd is the administration’s rationale for taxing banks to pay for losses in TARP.

The government expects its losses to result mostly from aid extended to AIG, General Motors and Chrysler, and the cost of mortgage modification efforts.

The administration decided to exclude the two automakers from the list of firms subject to the tax

The Atlantic's Megan McArdle has it right:

So we ought to tax bank profits because...GM is losing money just like everyone said it would ... I'm failing to see why the banks in particular--or rather the customers of the banks who will enjoy higher fees and lower interest rates--ought to bear the financial cost of the Administration's ill-advised bailout of the UAW.

..... Nothing more than a cynical and ridiculous public relations ploy to make it appear that the administration is going to make the big bad bank “pay” for their financial transgressions.

If I understand this article correctly, this 0bama proposal really states that financial institutions borrowing money from the government will in future pay the staggering annual interest rate of fifteen one-hundredths of one percent for future government loans. I’m sure that Goldman Sachs is quaking in its boots.

Meanwhile, neither the 0bama administration nor the Democratic congress has taken any substantive action whatsoever to put our national financial infrastructure back into proper order. Not a single damned thing.

he charges banks then they pass on those charges to us.

He assumes that this will go unnoticed because of a generalized economic illiteracy and a widespread seething antipathy for any entity branded a 'big business' by himself and his leftist coterie, and sadly he is right in many cases.

Now how about getting money from his unions or GM, etc.
why not those or is it because the unions get away with all of our money.

The union bosses faithfully serve to call up the Left's brownshirt footsoldiers as needed and so he will protect them at all costs, but thankfully more and more rank and file union members are rejecting the marching orders of the Union Gauleiters when it comes to voting and political support.

A great change is sweeping this land, and fewer and fewer people are mindlessly voting Democrat as the party continues to expose itself as merely a home for the failed ideas of bitter, closed-minded people.

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