I think the banking industry will lose a lawsuit against the bank tax plan because it's a fee not clearly a tax - after all it's not an income tax or other means of established taxation. It's not a tax on bonuses. Although, tax versus fee in and of itself would be an interesting Supreme Court case.
Some can argue it was unconstitutional to give that huge bailout to the banks and absorb moral hazard behind closed doors, even before TARP was fully passed by Congress. It clearly benefited the banks big-time. In lawsuits, you generally have to show damages to win relief. The government's action was an antidote to all the benefits they gave out first.
Taxpayers did not come out great on the TARP deal, not like Buffett and private investors.
TARP dollars were partially intended to shore up balance sheets and loosen credit for lending. Banks did not lend and traded the funds at incredible profits instead. Assessing a fee for that does not seem outlandish, even after-the-fact.
The administration can say itâs not retroactive and it has nothing to do with TARP. Rather, itâs for moral hazard and too big to fail going forward only. They are tying it to TARP, to kill the FTT bills in Congress. Come to think of it, DeFazio will probably use this logic for his next bill draft. Not TARP and the 700 billion, but continued too big to fail and moral hazard. Darn.
The article mentions the financial lobby thinks they will lose too. The more banks fight this, the more the President fights them back and wins political points. I guess we shall see tomorrow if the bank tax debate is good for front and center on election eve or not.