Earlier in the week President Obama expressed hostility toward big banks over the obscene bonuses they received I the year following the bailout. Over the course of his time in office, he has been vocal about his frusturation with the amount of manipulating large corporations and bank have over the government. Now, with the unveiling of his proposed $90 billion bank tax plan, he is finally saying what much of the public has thought for some time. "We want our money back, and we're going to get it."
Democrats have been incensed regarding bonuses and profits from banks that continue to elude a public that helped bail them out of the financial crisis they created. Despite this, their response to the proposal was cautious with the knowledge that last year’s pledge to retrieve AIG bonus dollars went unfulfilled. Some have been saying the house won’t begin enacting the tax proposal until the Senate agreed to follow suit.
Naturally, the banking industry is angered by the tax, though it’s estimated it would cost an estimated 5% from the banks bottom lines. The fee is set to be call the Financial Crisis Responsibility Fee and would apply primarily to Citigroup Inc., J.P. Morgan Chase & Co, Bank of American Corp., Goldman Sachs Group, Wells Fargo & co, and Goldman Sachs. Each bank would be up against an annual charge of roughly $1 with Citigroup and J.P. Morgan potentially paying in the ball park of $2.4 billion.
The White House rejected opposition, with President Obama using harsh rhetoric regarding banks “twisted logic” to justify why this sort of tax is necessary. Unfortunately that twisted logic may manifest itself in another way. Banking officials are warning that new tax may discourage bank from making new loans and prevent the economy from flourishing. Though the tax is not harsh enough to jusify this behavior, the banks may decide to tighten their own credit as a means of rebelling against the tax.
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