US President Barack Obama has proposed a new fee on big banking firms to recover 'every single dime' taxpayers shelled out to rescue Wall Street from the economic crisis.
The plan, if approved by Congress, would raise $90 billion from 50 financial institutions, including foreign banks operating in the US, under an effort to recoup money from a massive bail-out of the banking sector.
Obama said the move was aimed at preventing Wall Street firms from going back to business as usual and resuming high-risk lending practices.
'My determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at the very firms who owe their continued existence to the American people,' Obama said.
The new plan, already attracting opposition from the finance industry, was rolled out as the sector gears up to announce huge bonuses for top executives, which has inflamed the public as Americans face 10% unemployment and deep economic misery.
The title of the initiative, the 'Financial Crisis Responsibility Fee', makes it clear the administration is placing blame on the financial industry for the worst economic meltdown since the 1930s Great Depression.
The Obama administration has repeatedly said it would try to recoup the full cost of the $700 billion Troubled Asset Relief Program (TARP) which was used to bail out banks, and also tapped to help car makers.
A senior US official said the programme, which has seen some money already paid back, would now effectively leave the government around $117 billion out of pocket.
But the Financial Services Roundtable, which represents 100 top financial services firms, said the fee was 'strictly political'. Its president Steve Bartlett said two-thirds of the TARP investment from banks had already been repaid with a large profit to the taxpayer.
The administration's proposal, which requires congressional approval, will apply only to firms with over $50 billion in assets, applying a fee of 0.15% of liabilities of the companies. It will last 10 years or as long as necessary to recoup losses under TARP.
Even though car firms General Motors and Chrysler also received money from the TARP fund, they will not have to pay the fee, officials said.
According to a Treasury report to Congress published on Monday, the government had committed $545 billion of TARP funds as of January 6. Of that figure, $372 billion has been disbursed. Banks have already repaid $165.18 billion of those funds, leaving $209 billion outstanding.
