WASHINGTON (Legal Newsline) — The White House’s proposed “Financial Crisis Responsibility Fee” would collect taxes from financial institutions “to pay the tab of irresponsible firms, namely the auto companies, that still owe the government billions,” according to a Thursday blog entry by John Berlau on the Competitive Enterprise Institute website.
The White House claims that its fee is consistent with the congressional intent of the Troubled Asset Relief Program legislation that “requires the President to propose a way for the financial sector to pay back taxpay ers so that not one penny of the Government’s TARP-related debt is passed on to the next generation.”
The fee could be in place beyond 2021 if necessary. The structure of the fee is consistent with G-20 Leaders principles and similar to fees proposed by other countries. It is projected to reduce the deficit by $30 billion over 10 years.
“We also ask the largest financial firms — companies saved by tax dollars during the financial crisis — to repay the American people for every dime that we spent,” Obama said last week.
But the article notes that there is a provision that limits the fee to certain firms. The proposal states the fee will be re stricted to financial firms with assets over $50 billion and will be imposed until all TARP costs have been recouped.
“Although many of the largest financial firms have repaid the Treasury for their TARP assistance, they continue to implicitly benefit from the TARP funds that bolstered their balance sheets during a period of great economic upheaval,” Obama announced.
But as the Berlau article noted the fee is not on recipients of TARP as such, but only on financial institutions with assets in excess of $50 billion. Fidelity Investments would be an example of a financial firm that would be assessed the fee although it never took TARP funds.
The Obama administration maintains that “shared responsibility requires that the largest financial firms pay back the taxpayer for the extraordinary support they received.” But there is no such requirement for companies like General Motors and Chrysler that still owe billions to the American taxpayer.
The administration has said that although the fee is extraordinary financial institutions received extraordinary help from the American taxpayer.