As TARP Losses Mount, President Obama Plans to Announce New Bank Fees
President Obama is expected to announce new banks fees intended to recoup losses under the government’s $700 billion Troubled Asset Relief Program. The Treasury Department estimates losses of as much as $120 billion stemming from the TARP program.
While details of the President’s plan are unclear, the Wall Street Journal commented that the fee could be placed on bank liabilities, or possibly on a bank profits. White House Press Secretary Robert Gibbs stated that is the president’s goal to ensure the “money that taxpayers put up will be paid back in full.”
However, Timothy Ryan, president of the Securities Industry and Financial Markets Association, noted that “costs are typically passed along to institutions and individual investors, so the burden will likely fall on them.” Given this, it is likely that after borrowing $700 billion from taxpayers, the government will attempt to recoup this money by imposing fees that will ultimately hit bank customers, also known as taxpayers.
The TARP legislation includes a provision that requires the government to recoup its costs by 2013, causing some, such as Congressman Barney Frank, to support such a fee. However, as Frank rightly points out, it would be unfair to make banks subsidize money given to auto companies, which could ultimately account for the largest share of lost TARP money.
As people clamor for TARP money to be repaid, it appears that the taxpayer will shoulder yet another burden.
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