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.
CONCLUSION
The past 24 months has shown you that you must look out for yourself first. When Armageddon hits, nobody else fights for you, because they are fighting for their own survival. Furthermore, if there is a government hand out, be it through home loan forgiveness or TARP money, take it and run. The government will spread out the cost to everyone so don’t be the one left paying for something without getting anything in return. Take advantage of the system, because the system will always take advantage of you.
Readers, do you believe the US autoworker is more precious than the US financial services worker? If so, why?
Do worker unions, like the United Autos Worker union play a big part in lobbying the government to take care of certain people over others? Is this fair? Would creating a Financial Services Workers Union help this group of people?
Do you think Congress will pass Obama’s tax proposal into law?
What government bailout money have you benefited from?
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Keigu,
Sam Samurai – “Slicing Through Money’s Mysteries”
government won’t create jobs (other than federal jobs) and won’t fix our economy. they won’t fix our problems they ARE the problem. I’m still waiting for Americans to “get” this.
@Jason @ MyMoneyMinute
It’s not that the banks are too big to fail, it’s that they are too big to be bailed out…
I agree with fredct, there is nothing unconstitutional about having a targeted tax — government does it all the time. Tax the things they do not want you to be/do, and give tax breaks on the things they want you to be/do.
If the tax is targeting banks with assets over $50b, then that is the government saying we don’t like banks to have assets over $50b. This is just like the insanely high tax on cigarettes — government doesn’t want you to smoke.
I think it’s a sad reflection of our country’s socialist shift & fiscal irresponsibility over the last decade.
NOTHING should be to big to fail. Piecemeal out the failed assets and let those who actually HAVE been fiscally responsible be the winners. Any gov’t injections should be tied to infrastructure investment or as a match to encourage citizens to pay for their own stuff.
Check out the 2-part “MyMoneyMinute Stimulus Plan” I wrote last year and let me know where you agree:
Part 1: https://bit.ly/aTGmrE
Part 2: https://bit.ly/dAoXxO
@The Genius
Genius, I care because I want others who made read this to understand that FS’s stated opinion is entirely undefended and shouldn’t just be taken at face value. I don’t give a darn about small accidents like grammar and spelling. I do care that someone trying to criticize proposed policy as unconstitutional be able to explain themselves.
If you’re asking me what I would do with the banks, what I feel would be the best policy would be to break up the ultra large banks. Bank that gets so large that the irresponsibility of a few executives can put a national economy at risk is just not safe for the American people. But I’m (admittedly) not sure about the legality of that, and from a pramatic perspective, I don’t think it’ll happen. Short of that, I have no issue of the policy of taxing ultra-large banks to discourage their formation and keep more competition in the markets.
@fredct
Love the debate! Fredct, if you don’t have to dispute an argument FS never made, why the hell do you care? Are you the guy on message boards who point out spelling errors and generally annoy people?
Why don’t you contribute to the discussion about bank taxation? You’re a curious fellow.
@admin
P.S. yes, its your site, you can say whatever you want. Its your constitutional right (speaking of) to free speech. But refusing to explain your statements nonethless exposes the apparent lack of truth behind them.
@admin
I love the idea that I have to dispute an argument you’ve never made. If you want to have an actual discussion of the matter by explaining your rationale, I’d be happy to.
In the meantime all I can say is that its no different than any other tax or fee that may be levied. The others have stood the constitutional test for decades, and there’s no reason I am aware of that this idea wouldn’t also.
@admin
Things aren’t unconstitutional because you don’t like them. They’re unconstitutional for a specific reason. The idea of something being ‘too obvious to argue with you’ is oxymoronic.
Legal-wise it would be nothing more or less than a fee on banks with assets above a certain level (from what I understand of it). Care to provide a reason why that would be unconstitutional? If you can’t provide an explanation or defense of your assertion, then you shouldn’t make it.
Fredct – The great thing about having my own site is that I can say whatever I want, just like you’re free to go visit elsewhere if you disagree. Would love to hear your rebuttal. 750 words would be a great! thnx
@admin
Discriminating based on what? Private businesses do price discrimination all the time… child discount, senior discounts, early bird discounts, saturday-stay-over discounts, business fares, group rates, frequent user discounts, online purchase discounts, etc… all of these are discrimination based on certain criteria, which benefit some and disadvantage other ‘innocent people’.
Other than description based upon certain protected criteria (race, gender, etc), no, discrimination is not illegal. You probably are exposed to it multiple times per day, all completely legal.
Fredct – It’s too obvious that taxing banks which didn’t take TARP is unconstitutional for me to argue with you. Feel free to write your own post to argue why you think it is OK. Would love to read it!
@fredct
Not sure whats going on, but that was supposed to be a reply to ‘spiteface’, saying that you did not defend your assertion that its “unconstitutional”.
Fredct – Isn’t it obvious that discriminating against innocent people is unconstitutional?
Absolutely. I may be a couple days late on this one, but its the first thing I noticed.
I’ll even amend that. Any banks that went before Congress AGAINST the bailouts and TARP in general (before the legislation was passed), should be immune to any taxes or fees to recoup those losses — even if they were forced by Bernanke to take the funds (I think BB&T would fit this bill).