ABC News' Jake Tapper and Sunlen Miller report:
“We want our money back, and we’re going to get it,” President Obama said sternly this afternoon from the Diplomatic Reception Room.
The president was announcing a new tax on big banks – what he calls the “financial crisis responsibility fee” – to repay the up to $120 billion in Troubled Asset Relief Program funds that the taxpayers are expected to lose. The tax comes at around the same time the top five financial institutions in the US — Bank of America, Citigroup, Goldman Sachs, JP Morgan Chase and Morgan Stanley — have allocated roughly $90 billion for overall compensation. Bonuses are more than half that figure.
Trying to channel or at least reflect some populist outrage amongst, the president said, “If these companies are in good enough shape to afford massive bonuses, they are surely in good enough shape to afford paying back every penny to taxpayers.”
“My commitment is to recover every single dime the American people are owed,” the President said, adding that his determination to achieve this goal was only heightened when he’s sees reports “of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people, folks who have not been made whole and who continue to face real hardship in this recession.”
In his FY2011 budget proposal, President Obama will promise a tax on 50 of the top financial firms to be in place for 10 years, or as long as it takes to raise the full amount necessary to cover the taxpayer losses.
The cost will not be borne by community banks or small financial, firms – only the largest firms with more than $50 billion in assets. The size of the fee each bank owes will be based on its size and exposure to debt, Obama said, “so that we are recovering tax dollars while promoting reform of the banking practices that contributed to this crisis.”
Some critics of the proposal have suggested that banks will simply pass that tax onto consumers, but the president suggested the banks take the money out of their bonus pool instead.
“Instead of sending a phalanx of lobbyists to fight this proposal, or employing an army of lawyers and accountants to help evade the fee, I'd suggest you might want to consider simply meeting your responsibilities,” he said. “I'd urge you to cover the costs of the rescue not by sticking it to your shareholders or your customers or fellow citizens with the bill, but by rolling back bonuses for top earners and executives.”
The president appeared with key members from his economic team – Office of Management and Budget director Peter Orszag, Council of Economic Advisers Chair Christina Romer, Secretary of the Treasury Tim Geithner, and National Economic Council director Larry Summers.
The president noted that this should not be seen as a “punishment” to Wall Street firms, “but rather to prevent the abuse and excess that nearly caused the collapse of many of these firms and the financial system itself.”
Mentioning again that there are reports of firms engaging in risky bets, reaping quick rewards, and returning to compensation practices, the President called this, “business as usual.”
“The financial industry has even launched a massive lobbying campaign, locking arms with the opposition party to stand in the way of reforms to prevent another crisis,” he said. “That, too, unfortunately is business as usual.”
-Jake Tapper and Sunlen Miller