The U.S. House of Representatives and Senate agreed last week on the basics of a financial reform plan set to be passed by Congress and approved by President Barack Obama in the next week or so.
But one important part of the bill remains up in the air: a decade-long tax for the nation’s biggest banks.
Most Democrats, Obama Support Bank Tax
Obama, along with a majority of congressional Democrats, supports the idea of a bank tax. The 0.15% tax would be a way for the government to recoup the money it lost when it bailed the largest banks out of the financial crisis.
“We need to impose a fee on the banks that were the biggest beneficiaries of taxpayer assistance at the height of our financial crisis — so we can recover every dime of taxpayer money,” Obama said during his weekly Online address.
The reason the bank tax might not be included in the final bill is the fact that Republicans and some Democrats have voiced concern over whether it goes too far to punish banks. Anti-bank tax politicians claim most banks that would fall under the tax have already repaid all or most of the money received under the TARP bailout plan. Republicans in congress have threatened not to allow the financial reform bill to pass unless the bank tax is stripped from the legislation, and the Obama administration on Tuesday reportedly was considering dropping the tax in order to allow the rest of the bill to pass.
Which Banks Would be Taxed
Only the nation’s biggest banks would be affected by a bank tax. Financial institutions with $50 billion or more in assets, along with hedge funds with more than $1 billion, would have to pay the tax.
Other factors that could come into play when deciding whether a bank should be exempt from the tax include a risk assessment, how accessible the bank is to low-income communities, whether the bank performs actions that the government deems creditworthy, and whether the company is used as a source of credit government.
Video: President Obama discusses the financial reform bill: