Today, President Obama proposed a new tax on big banks, saying that the American taxpayers want TARP money back.
The new tax is aimed at making sure all of the $700 billion in bank bailout funds is returned. The White House says all but about $117 billion is expected to be paid back.
The proposed new tax would affect the largest financial institutions, firms with over $50 billion in assets.
The President said, "If these companies are in good enough shape to afford massive bonuses, they are surely in good enough shape to afford paying back every penny to taxpayers."
But some claim the move is a political one, not an economic strategy.
I talked to the president of a local bank (who would not be affected by the new tax because it has less than $50 billion in assets) who says most banks are paying TARP funds back with interest. Rick Bagy of First National Bank of St. Louis says that he believes President Obama is channeling the sentiment that "fat cat" bankers need to pay.
Others, however, say a new tax is a good start towards penalizing banks that are "too big" and may pave the way for more industry reforms.
Here's what the US Chamber says: www.uschamber.com/issues/letters/2010/100113_banktax
Another take on the issue: baselinescenario.com/2010/01/14/the-obama-financial-tax-is-a-start-not-the-end/#more-6005
Either way, Congress would have to approve the proposal before it went into effect.