Obama Mulls Temporary Bank Tax

by Leroy Baker, Tax-News.com, New York

13 January 2010

US President Barack Obama is understood to be considering a one-off tax on banks in a bid to recoup some of the USD700bn in funds allocated to the Troubled Asset Relief Program (TARP), which was used to bail out the banking industry in the midst of the financial crisis.

White House spokesman Robert Gibb revealed at a press briefing on January 11 that the President is considering the inclusion of measures in his forthcoming budget blueprint, due for release next month, to ensure that TARP funds are "paid back in full."

While Gibbs was reluctant to go into specifics about what form such a tax would take, many are speculating that Obama will choose to place some sort of penalty on bankers' bonuses, with banking groups preparing to announce bonuses thought to be in the region of USD65bn in the coming weeks thanks to a strong recovery in the industry last year.

"I would simply say … that the President has talked on a number of occasions about ensuring that the money that taxpayers put up to rescue our financial system is paid back in full. That's been the President's position. I think that's the least that taxpayers are owed," Gibb said.

The White House spokesman added that more concrete details of a banking levy could be announced later this month, shortly before the budget itself is released.

Gibbs's comments were made on the same day that New York Attorney General Andrew Cuomo announced that he had written to eight major Wall Street banks seeking detailed information regarding bonus allocations. These banks include Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, J.P. Morgan Chase, Morgan Stanley, State Street, and Wells Fargo.

The letters request, amongst other things, details of all bonuses paid to employees in receipt of annual income of more than USD250,000 for the years 2007, 2008, and 2009.

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