President Obama will unveil plans today to levy a new and supposedly temporary tax on big banks to help recoup losses incurred by the federal government in the Wall Street bailout program that was approved in late 2008.
The move came as a surprise to the banking industry, where big banks have repaid the billions loaned to them by the federal government.
"I think using tax policy to punish people is a bad idea," said James Dimon, the head of J.P. Morgan Chase told reporters on Wednesday.
Dimon was one of four big bank chieftains who had been summoned to testify at the first public hearings on a special panel that is reviewing the Wall Street collapse of Fall 2008.
He said since banks have done their part to return the bailout money, there's no reason the feds should be pressing them for more money to make up for other losses in the automobile and financial services arenas.
"I think it would be very hard for the industry to pay for the auto companies," said Dimon. "At some point you've got to be fair."
Dimon was asked what would the banks do when hit by such a levy.
"All businesses tend to pass their costs onto their customers," Dimon said flatly.
The White House though wasn't interested in any such arguments, with Press Secretary Robert Gibbs and others making plain that the news of big bank bonuses for executives had angered administration officials.
The logic is that the banks took billions in federal aid to get back on their feet, and even though they have now paid that money back, they shouldn't be showering execs with big checks.
In case the White House is reading, this material was added on at 6am, when the embargo expired on extra details offered up Wednesday night by officials in a conference call.
The bank tax is being called the "Financial Crisis Responsibility Fee."
It would raise $9 billion a year over 10 years. Senior administration officials say the goal is to pay back "every penny" of the Wall Street bailout (the TARP money.)
It would apply to banks/financial companies with more than $50 billion in assets, though FDIC deposits would not be counted as assets for this purrpose.
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