Obama Looks to Tax Banks

With banks scrambling to pay back the government money from last year's bailout, and outrage once again on the boil over banker pay, President Barack Obama will propose a new tax on financial players.

The president is expected Thursday to call for a tax on about 50 of the biggest banks and major financial institutions to recapture taxpayer losses on the fund used to bail out the bankers in the past year.

Obama wants to levy the tax on banks, insurance companies and brokerages with more than $50 billion in assets, beginning June 30. The administration is looking to haul in $90 billion over 10 years, an administration official told the New York Times.

The losses from the $700 billion Troubled Asset Relief Program created in the chaos of October 2008's financial system collapse, and the tax would remain in place until that money it recouped.

"The fee that is put forward here is in many ways a minimum -- a minimum of what is owed back for the rather significant costs that are borne in many aspects by the taxpayers," an administration official told reporters, Reuters reports.

The administration is responding to populist fury at the banks that has been alternately simmering and boiling over since the collapse of Lehman Brothers in October 2008 and the subsequent government rescue package.

Most recently, big banks such as Bank of America and Citigroup have raced to pay back the government money they received from the bailout program. And many of the big beneficiaries of government bailout money have reported profits,

At the same time, such banks as Goldman Sachs, which also received bailout funds, have been setting aside giant war chests to pay their executives big bonuses at a time of 10 percent unemployment. That has stoked fury on the right and the left.

Rep. Barney Frank, chairman of the House Financial Services Committee, said he would hold a hearing on executive pay January 22.

“I think compensation has gotten excessive,” Frank said.

Obama administration officials aren't saying the new fee is retribution for hearty pay packages to bailed out bankers. Rather, they're couching it in terms of a fee to recoup money that would otherwise be added to the national debt. But it's doubtful the administration would be looking to sock it to the industry if bankers weren't so eager to turn their recovery into windfalls for their executives.