THE nation's largest financial institutions were relieved to get a lifeline from the taxpayers when the economy crashed in 2008. Now that they're back in the land of profitability, they can show the public their gratitude by replenishing the dollars lent out to all those firms that were "too big to fail."
President Obama's proposed Financial Crisis Responsibility Fee, an annual 0.15 percent tax that would be assessed on the liabilities of banks, insurance companies, and other financial firms with at least $50 billion in assets, is a modest proposal to do that. Rather than rail against it, America's banks should support the beleaguered, debt-ridden Treasury that supported them.
Sure, the big financial houses have been paying back their TARP money with interest. But it's estimated that $117 billion of the $700 billion Troubled Asset Relief Program loan fund will not be recovered - largely the money that was extended to insurance giant American International Group, General Motors, and Chrysler. Large banks got a boost from the AIG bailout, about $60 million worth because of their trades with the corporation.
After subjecting the United States and the world to an economic collapse rooted in risky financial behavior, the big Wall Street firms and their peers elsewhere have recovered. The latest examples of that are the profits being reported and the big compensation packages being paid once again.
On Friday, a Wall Street Journal analysis estimated that the nation's top banks and security firms are on track to pay out record compensation for 2009, about $145 billion. That would be nearly 18 percent more than executives, bankers, traders, and money managers got the previous year. How many other Americans, in a down economy with 10 percent unemployment, will see 18 percent extra?
Some of the compensation will come in huge bonuses - which Congress should seek to tax at higher rates. U.S. Rep. Peter Welch (D., Vt.), for instance, last week proposed a 50 percent levy on bonuses of more than $50,000 at firms that took the bailout money.
These pay numbers make it difficult for banks to oppose the President's fee and for Republicans to dismiss it by saying the tax will just be passed on to consumers. The people who fund the federal government rescued the American financial system. The people deserve to get their money back.
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