http://online.wsj.com/article/SB100...43164259509250.html?mod=WSJ_hps_sections_news
Geithner Says Proposed Bank Fee Is Antidote to AIG Bonuses
Green Comment on WSJ site:
A punishing-bank tax on big banks to repay TARP loans is unconstitutional. "Let Wall Street Pay for Main Street" in any form â bank tax, financial-transaction tax, TARP or otherwise - is unconstitutional.
Our American constitution may have borrowed legal concepts from various European law but our founding fathers expressly rejected the European legal concept of the nasty "bill of attainder.â. The bank tax or a financial-transaction tax would be an unconstitutional bill of attainder. Learn more about why these taxes are unconstitutional on my blog at
http://www.greencompany.com/blog/index.php?postid=59.
The administration is mindful of this unconstitutional argument as it was already raised by the bank lobbyâs attorneys. Thatâs why the administration is branding it a âbank responsibility feeâ rather than a bank tax. The media calls it a bank tax.
Some of the ideas behind a bank fee make some sense. Charging big banks for government future and past government services and backstops in bailouts or wind downs seems appropriate.
The banks have paid back TARP once with interest and warrants (which will still be even more profitable when sold), so paying a bank tax a second time is unfair. Plus, using that double TARP payback to finance jobs or stimulus programs is against TARP legislation too.
Rather than pursue this bank fee or tax concept - which has constitutional questions and which is expected to face new 59/41-friction in the Senate - the administration should get back on board with the G20, as it said it would do at the G-20 meetings in Pittsburg and Scotland in 2009. President Obama promised the G20 and world that he would solve global problems with global consensus on global solutions.
Currently, the IMF, and leading countries in the G-20 reject the administrationâs bank fee/tax and Volcker Rules proposals. The IMF and G-20 countries have been stating individually that they prefer a more straight-forward bank insurance premium, like adding to the FDIC premiums, but instead on a global basis for a global fund.
The bank insurance premium levy concept is constitutional in the US, Germany, UK and other leading regions, whereas Germany already said the banker-bonus tax and the bank tax would be illegal in Germany. The bank insurance levy will not be used for general tax funds and spending, or for global social causes â which celebrities and economists are pushing for. Rather, the insurance levy fund will be solely used to deal with the next (inevitable) global banking crisis. Not to bailout and save banks necessarily, but also to help wind them down under living wills.
This problem is very important and solutions are required on a global basis. The worldâs banks are interlocked and global banking goes on in all the leading financial capitals by global behemoth banks. It will be hard to fix too big too fail, so why not come up with a working remedy. Isnât it way too important an issue to be politicized and used as a rallying cry to raise populist pitchforks?
The IMF and G-20 may pass this bank insurance premium, and if the US bank tax is passed too, wonât US-based banks be paying a third time? Once to repay TARP, a second time on the bank tax and a third time on the global insurance levy.
