FT.com / Financials - US banking levy expected to raise $90bn .
The FT has reported:
President Barack Obama will announce on Thursday a sweeping levy on about 50 financial institutions that will raise an estimated $90bn to reduce the federal debt.
The “financial crisis responsibility fee" will hit investment banks such as Goldman Sachs particularly hard because insured deposits, the main funding mechanism of retail and commercial banks, are exempt from the charge that is levied on other liabilities.
The timing — in the week that banks are set to announce billions of dollars in bonus pay-outs — is widely seen as an attempt to assuage public anger at the industry whose compensation is frequently held up in stark contrast to the high unemployment rate in the rest of the economy.
Good news.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
This almost seems a little weak. Maybe I’m being cynical but it’s possible that this levy may actually contribute to the payout of bonuses.
While its good that tax payers will receive some payback, the levy may provide an excuse to continue the bonus culture by alleviating the guilt associated with the bailouts. If anyone complains about bonuses, the banks could just point to the levy to shut people up.
Am I being crazy?
Jim,
Your comment seems to assume that somehow Wall Street needs an excuse for its compensation culture, or that it is somehow desirable for the government to intervene on the issue of variable compensation.
I don’t believe that this is the way the Obama administration is thinking about this issue.
As long as the taxpayers have been repaid (with interest) for their support to the financial system, the administration is happy to leave the issue of variable compensation as a private matter to be dealt with between financial institutions, their employees and their shareholders.
And I believe most Americans won’t see anything wrong with this.
Key fact: the levy will be made on 50 banks over ten years.
This is petty cash for the banks.