Tuesday, May 04, 2010

Hatch looking out of the poor mega banks

While his colleague is getting drummed out of office for voting for the TARP and co-sponsoring bills with Democrats, Sen. Orin Hatch is looking out for his constituents donors, the big banks.
"It isn't fair to everyone," Hatch, R-Utah, told Geithner in a Senate Finance Committee hearing.

That tax-writing committee has been considering an Obama administration proposal to assess a fee of 0.15 percent on the liabilities (other than deposits and certain required capital holdings) of financial institutions that have more than $50 billion in assets.

"Is it fair to apply this tax not only to companies that have repaid TARP (Troubled Asset Relief Program) with interest, but also to companies that did not take TARP money at all?" Hatch asked.
Yes it is fair. Because these mega financial institutions created many of the financial instruments that caused the financial disaster that we are still trying to recover from. I spent all of last year on a case against a mega bank for "loan" that they collateralized and sold to hedge funds because they systematically overleveraged the borrowers to make their fees. There have been other cases of other big banking institutions doing similarly destructive things.

In fact, a resent study reported that bankers destroy 7 times as much wealth as they create in the economy.

Hatch's other questions to Gietner were why don't you tax companies Republicans don't like and blame for the Great Recession--Fannie Mae, Freddy Mac, GM, Chrysler, etc. This just reveals that Hatch appearant concerns about fairness are really about partisanship. Newsflash: McCain lost the 2008 election in a landslide, in part because he said "the fundamentals of our economy are strong."

People are really angry about big banks, and rightfully so. Those institutions made stupid products and made everyone else pay for them while they walked away with big bonuses for their overpaid executives. It is only fair that big banks, which make our financial system inherantly unstable pay into a fund to protect us against future bailouts.

Perhaps such a law would just make every firm fiddle with their balance sheets so that they have 1 cent less that $80 billion in assets. Afterall, those big banks have plenty of experience with fudging balance sheets.

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