Getting Our Money Back From Wall Street via A Financial Reform Fee

Over the past two years more than 7 million Americans have lost their jobs. Countless businesses have been forced to shut their doors. Few families have escaped the pain of this terrible recession. And rarely does a day go by that the President doesn’t hear from folks who are hurt. That’s why the White House has pushed so hard to rebuild this economy. But even as the White House works tirelessly to dig our way out of this hole, it’s important that we address what led us into such a deep mess in the first place.

Much of the turmoil of this recession was caused by the irresponsibility of banks and financial institutions on Wall Street. These financial firms took huge, reckless risks in pursuit of short-term profits and soaring bonuses. They gambled with borrowed money, without enough oversight or regard for the consequences. And when they lost, they lost big.

Little more than a year ago, many of the largest and oldest financial firms in the world teetered on the brink of collapse, overwhelmed by the consequences of their irresponsible decisions. This financial crisis nearly pulled the entire economy into a second Great Depression.

As a result, the American people — struggling in their own right — were placed in a deeply unfair an unsatisfying position. Even though these financial firms were largely facing a crisis of their own making, their failure could have led to an even greater calamity for the country as a whole. And that’s why the previous administration started a program — The Troubled Asses Relief Program, or TARP — to provide these financial institutions with funds to survive the turmoil that they had helped unleash. It was a distasteful but necessary thing to do.

Many originally feared that most of the $700 billion in TARP money would be lost forever. But when President Obama’s administration came into office, they put into place rigorous rules for accountability and transparency, which cut the costs of the bailout dramatically. The White House has now recovered most of the money they provided to the banks through TARP. That is good news, but as far as the President is concerned, it is not good enough.

President Obama wants the taxpayers money back — all of it — and the White House is going to collect every dime. That is why, this week, President Obama proposed a new fee on major financial firms to compensate the American people for the extraordinary assistance they provided to the financial industry. And the fee would be in place until the American taxpayer is made whole. Only the largest financial firms with more than $50 billion in assets will be affected, not community banks. And the bigger the firm — and the more debt it holds — the larger the fee. Because the White House is not only going  to recover the American taxpayers money but also help close the deficits; the White House is going to attack some of the banking practices that led to the crisis.

The fact is, financial firms play an essential role in our economy. They provide capital and credit to families purchasing homes, students attending college, businesses looking to start-up or expand. These are all critical to America’s recovery. That is why the White House’s goal with this new Financial Reform Fee, and with the common sense financial reforms is to seek not punishment but to prevent the abuse and excess that nearly led to its collapse. The White House’s goal is to promote fair dealings while punishing those who game the system; to encourage sustained growth while discouraging the speculative bubbles that inevitably burst.

Ultimately, that is in the shared interest of the financial industry and the American people. And of course, President Obama would like the banks to embrace this sense of mutual responsibility. However, banks have ferociously fought the financial reform efforts. The industry have even joined forces with the opposition party to launch a massive lobbying campaign against common sense rules to protect consumers and prevent another crisis. Now, like clockwork, the banks and the politicians who curry their favor are already trying to stop this financial reform fee from going into effect.

The very same firms reaping billions of dollars in profits, and reportedly handing out more money in bonuses and compensation than ever before in history, are now pleading poverty. Those who oppose this financial reform fee say the banks can’t afford to pay back the American people without passing on the costs to their shareholders and customers. But that’s hard to believe when there are reports that Wall Street is going to hand out more money in bonuses and compensation just this year than the cost of this financial reform fee over the next 10 years.

If the big financial firms can afford massive bonuses, they can afford to pay back the American people. those who oppose this financial reform fee have also had the audacity to suggest that it is somehow unfair. That because these firms have already returned what they borrowed directly, their obligation is fulfilled. But this willfully ignores that fact that the entire industry benefited not only from the bailout, but from the assistance extended to AIG and to homeowners, and from the many unprecedented emergency actions taken by the FDIC, and others to prevent a financial collapse. And it ignores a far greater unfairness: sticking the American taxpayers with the bill.

Getting Our Money Back From Wall Street Through A New Reform Act — finanical reform fee

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Other Resources

• A Push For Jobs
• President Obama Weekly Address July 11, 2009
• President Obama Weekly Address April 25
• Small Business Tax Cuts and Tax Credits