Thursday, January 14, 2010

Obama to outline $90bn bank bail-out tax

Wall Street bank chief executives at the FCIC
Banks will be asked to pay more for the assistance they got from taxpayers

President Barack Obama is expected to announce plans for a new tax to be levied on bailed-out US banks later.

The fee is designed to recoup $90bn (£55bn) that US taxpayers are expected to lose from bailing out the banks during the financial crisis.

It comes ahead of the latest reporting season on Wall Street, with banks expected to report record bonuses.

The tax, described by officials as a "financial crisis responsibility fee", would be imposed over 10 years.

However, it is not yet clear how the fee will be levied.

Retrospective action

Reports suggest that Mr Obama will charge banks based on their assets or profits, rather than targeting bankers' bonuses specifically as in the UK and France.

The BBC's business editor Robert Peston suggests that banks could be charged depending on their reliance on wholesale finance - money provided by other banks and financial institutions.

The tax would amount to a retrospective bill for some of the taxpayer assistance received by these banks.

The US government spent more than $250bn bailing out banks during the financial crisis through its Troubled Asset Relief Programme (Tarp), but much of this money has since been refunded

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