Obama slaps 'bailout' tax on financial firms

US President Barack Obama proposed a plan to tax financial companies that took bailout funds from Washington to keep them from collapsing like Lehman Brothers. The legislation is necessary to make sure Wall Street banks return the money they accepted in full. As per the Obama proposal, Wall Street banks are liable to pay up to US$117bn to reimburse taxpayers for the financial bailout, as he slammed bankers for their massive profits and obscene bonuses. "My commitment is to recover every single dime the American people are owed," Obama said at the White House yesterday, flanked by members of his economic team. "We want our money back and we are going to get it," he said. "My determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people," Obama told reporters.

The fee calls for a levy of 0.15 of a percentage point on the balance sheets of companies with assets exceeding US$50bn. It is also aimed at helping to reduce the ballooning US budget deficit. The assessment on excess liabilities at big firms is designed to raise about US$90bn over 10 years. It would remain in place for at least 10 years, or until all losses from the Troubled Asset Relief Program (TARP) were repaid. Ten firms will pay 60% of the tax. The fee would need to be approved by Congress. Full details of the fee proposal will not be laid out until Obama delivers his budget for fiscal 2011 in early February.

The special assessment would apply to about 50 companies - including banks, bank holding companies, thrifts, insurance companies, and broker-dealers. The fee would not apply to hedge funds or mutual funds. AIG will be subject to the fee, but mortgage lenders Fannie Mae and Freddie Mac, which are under government conservatorship, will be excluded. The fee would also not apply to General Motors Co. and Chrysler, the still-ailing US automakers that got bailout money.