Banks Fight Back
I brought you some news last week on Obama’s controversial new tax. He imposed it on the major wall street giants who are largely held responsible for the economic crisis. This move (3 years earlier than something like this needed to be imposed, legally) is meant to repay the government and taxpayers for all government expenditures in the bailout.
And now is when things get interesting.
You didn’t think major Wall Street players were going to take this "Responsibility Tax" lying down, did you? They’ve decided to take the issue to court to decide the constitutionality of the tax. They’ve hired top lawyers from the Securities Industry and Financial Markets Association (SIFMA) to study whether the tax can be considered arbitrary. This is because it only targets one industry.
This tax is meant to recoup the government’s $117 billion shell-out to pay for the bailout. It remains unclear exactly which institutions would be affected by the tax. Most larger institutions that benefitted from the relief program have already paid back their loans with interest. The government has actually made $19 billion on its loans.
SIFMA issued a statement expressing its concern with the proposed plan when the government hasn’t even had the initial loan paid back. Apparently, SIFMA feels that the desire to recoup expenses is a bit premature at this point.
To put things in some kind of perspective, the nation’s three largest banks, BofA, Chase, and Citi would end up paying $44.2 billion over the next ten years. They rightly claim that other industries, such as the auto and insurance industries, also benefitted from the government assistance programs. They feel that the banking industry should not be singled out.
Obama’s counter to the argument claims that the tax is not being levied based on who took money or benefitted from the program. Rather it’s meant as a measure against those organizations responsible for the crash. It is generally acknowledged that the lion’s share of the blame rests with the banking industry.
We’ll all be awaiting the outcome of the case, whenever it begins.
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