Obama to unveil bank fee plan on Thursday

WASHINGTON: President Barack Obama will on Thursday unveil a fee on top finance firms to recoup billions of taxpayers’ dollars used rescuing the sector during the economic crisis, a senior official said. The scheme will be unveiled as many of the firms rescued by public funds gear up to announce huge bonus payouts to top executives while the rest of the United States remains mired in economic woe and high unemployment.

The Obama administration has repeatedly said it will try to recoup the full cost of the $700-billion Troubled Asset Relief Program (TARP). “President Obama will announce Thursday the administration’s plan to recoup expected losses from TARP in the form of a fee on the country’s biggest financial firms,” the senior official said on condition of anonymity.

“The President and the economic team felt it was important to discuss ways to recoup every dime for the American people more quickly than the law required,” the official said.

Some reports had said the money raised by the new levy could go as high as $120 billion, but the official said that figure was likely too high. It was not immediately clear how the fee would be calculated but reports have suggested it could be levied only on ‘high risk’ transactions carried out by leading banks and finance firms, not on small commercial institutions.

A bank fee may help the White House channel public anger over big bonus payments on Wall Street, as Americans face the reality of 10% unemployment and a slow economic recovery. According to a treasury report to Congress published on Monday, the government had committed $545 billion in TARP funds as of January 6.

Of that figure, $372 billion have been disbursed, out of which $165.18 billion has already been repaid by banks, leaving $209 billion outstanding. With the bonuses issue likely to explode into political controversy later in the week, the US government made clear however on Monday it had no intention of imposing a one-off 2009 tax on individual bankers bonuses.

Asked if the United States was planning to follow moves unveiled this week by Britain and France for ‘community’ taxes on bankers bonuses, treasury spokeswoman Meg Reilly said in an email: “Not at this time.”