Report: Obama considers levy on big banks
US President Barack Obama is considering a tax on large banks bailed out with government money, a newspaper reported.
The idea was to recover as much of the losses as possible from a 700-billion-dollar bailout fund set up to rescue US banks, officials told The New York Times Monday. The losses were estimated as high as 120 billion dollars, DPA reported.
The details of the plan had yet to be finalized but were likely to include a levy on financial institutions according to their size and the risk levels of their activities, the report said.
The revenues would be used to reduce the US budget deficit, which is at its highest since World War II, and the penalties were seen as a way to discourage excessive risk-taking by banks in the future.
The tax was also expected to help appease US taxpayers angry at the banks' state-aided return to profitability and the reappearance of bonus payments for executives while unemployment continues to rise.
Previous plans to recover some of the money through a transaction tax or a tax on bonuses were rejected by the administration.
Its new plan faced criticism. Edward L. Yingling, president of the American Bankers Association, warned that a levy on large banks would "decrease their ability to lend."
Speaking to the Times, he added that Obama had recently urged bankers to ease restrictions on loans to small businesses.