The government introduced new legislation to tax all “big banks” 0.15% of their assets to recoup about $120 billion in TARP money. What’s interesting is that the government is also taxing banks who did not receive TARP money, while conveniently leaving out AIG and the auto industry!
Three Takeaways From Asymmetric Regulation:
1) Because the government is imposing a tax on assets for all big banks, they are encouraging all banks to take excessive risk and accept hand outs in the future. If a non-bailed out bank is getting punished, why not join in on the fun too? Friends at government-owned Citibank all went down to the Rose Bowl using free $500 face value company tickets ($1,000+ in the after market) with tax payer’s blessings. Meanwhile another friend who works at a non-TARP bank can’t spend more than $100 for a client dinner total, without having to get approval. Message to friend: tell your bosses to party it up if Citibank is having a great time!
2) AIG is exempt from new taxation because AIG is 80% owned by the government. If the government punishes AIG, they are punishing themselves. Federal government employees are raking it in, and I’ve spent about one hour so far learning how be a $170,000 a year Department of Transportation employee if my blogging career doesn’t make it in three years. So exciting to have such a lucrative back up! Back off people, the job is mine!
3) The auto industry, which has paid back absolutely nothing, and is the biggest contributor of the $120 billion in tax payer losses is protected because the rank and file auto worker is deemed more precious than the rank and file finance worker. I’m all for helping out hard working people who had nothing to do with the collapse. But, what did your local TARP bank teller do? Nothing, just like the factory man at GM had nothing to do with the latest horrible design and corporate strategy of the 2010 Buick LaCrosse. Remember when GM executives flew in their private jets to the Congressional hearings? We need to support private jets for auto execs like we need to support higher taxes for more pork spending.