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Hey, Tea Party. You see it coming, don't you? Washington is setting up Wall Street as the fall guy for all its own stupidities.
That's what Washington's cockamamie plan for a new “fee” on the banks is all about.
Don't be fooled. This “fee” is nothing more than Washington fighting populism with even more populism. It reveals just how desperate and cynical your politicians have become.
And unless you're keen to give government even more control over your life, you'd be crazy to buy what Washington is selling.
Now, nobody is saying that you should like Wall Street. I've spent most of a prosperous career there — and it's hard even for me to like it.
It is self-serving. It is full of greedy, overpaid people. It did contribute mightily to last year's economic collapse. And you, the U.S. taxpayer, did bail it out. All true.
But in America, isn't a deal, still a deal?
The $700 billion TARP bailout from October 2008 was just that — a deal. It was a deal between Congress, the U.S. Treasury and Wall Street to save our banks and our economy.
No doubt it was a messy affair, fraught with ugly conflicts and choices. The Treasury secretary had been CEO of Goldman Sachs. The President of the NY Fed was on his way to be our next Treasury secretary. But Hank Paulson, Tim Geithner and Fed Chairman Ben Bernanke did their best in coming up with the deal.
And here's the main thing — the most important thing for you and the American economy — the deal worked. In fact, it worked far better than anyone dared hope.
And now because it worked so well — and the banks are stupidly but freely paying bonuses — the government wants a do-over. Big bonuses in hard times just make the politicians look bad.
Only the government can't re-cut the deal because almost all the big banks have already lived up to their end of it. The government has gotten back $165 billion or two-thirds of its investment in the banks — and earned an 8% return.
But for the White House, a deal can't stand if it ends up losing Democrats lots of votes. So it's time to invent a “fee” on the banks “to help recoup losses from TARP and reduce the deficit.” Supposedly, that will get the government another $120 billion – the monies the Treasury thinks TARP will end up costing the taxpayer.
Is this $120 billion based on TARP losses in AIG or the banks? Or is the “fee” on the banks how the White House intends to recoup the $100 billion or so, we've poured into GM, Chrysler, GMAC and Chrysler Financial?
We don't know yet — because we have no details. But it's hard not to be suspicious when the government invents a special corporate tax, calls the tax a “fee” and then dresses it up as means to “recoup losses and reduce the deficit”.
After all, this is the same government that just lifted its $400 billion loss limit on Fannie Mae and Freddie Mac, Washington's favorite playthings. It's the same government that has spent $787 billion in stimulus money with little to show for it. And it's the same government that is currently running $1.4 trillion annual budget deficits.
The truth is — if the government wants to just expropriate $120 billion from the shareholders of our nation's banks, it should just say so.
But then again, money is not the point of the whole “bank fee” exercise. This is about politics. This is about politicians in Washington re-directing your anger towards Wall Street so that it doesn't end up where it really belongs — right on top of them.
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