Bloomberg the Company

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Follow Us

Industry Products

Bank Fee Shrinks in Obama Budget as TARP Costs Slide

Don't Miss Out —
Follow us on:

Feb. 14 (Bloomberg) -- President Barack Obama’s proposed budget includes a smaller version of a fee he proposed last year that would be paid by U.S. financial institutions, including Bank of America Corp. and JPMorgan Chase & Co.

Under the budget plan released today in Washington, the fee would raise $30 billion over 10 years, down from $90 billion when it was first proposed last year.

Like last year’s proposal, the fee would apply to bank holding companies, thrift holding companies and broker-dealers with more than $50 billion in assets.

Even the smaller fee may face obstacles in Congress. The banking industry opposed the initial fee, which was introduced in January 2010. Steve Bartlett, president of the Financial Services Roundtable, a Washington-based trade group that represents the nation’s largest banks, said at the time the administration proposal was “strictly political.”

Recouping Costs

The administration initially proposed the fee to recoup the costs of the 2008 Troubled Asset Relief Program, as required under the law establishing the program. As many banks have paid back the money they received from the government, the estimated cost of the program has shrunk.

The Congressional Budget Office, which at one time estimated the program would cost $350 billion, has lowered its projection to as little as $25 billion. Of the $700 billion Congress authorized for TARP in 2008, $410 billion was disbursed.

Under the proposal released today, “covered liabilities” would be taxed at 7.5 basis points, with more stable sources of capital taxed at a discounted rate. The fee could be deducted for corporate income tax purposes and would be structured in a way that is “broadly consistent with the principles” agreed upon by leaders of other large economies, according to the plan.

One basis point is equivalent to 0.01 percentage point.

To contact the reporters on this story: Richard Rubin in Washington at rrubin12@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.