Obama Taxes Wall Street Excess!
During these times of economic recession, public anger on both sides of the Atlantic has turned to ’greedy bankers’ and what is seen as the obscene level of bonuses that are still being paid to the very people who have received opprobrium for creating the recession initially. If there is one thing that a politician on any side of the spectrum likes it is siding with public opinion and President Barack Obama’s plans outlined today in a hard hitting speech will find heavy support amongst his core voters and even amongst Republicans who are being bitten by a deepening financial crisis.
Whilst in many ways the problems that President Obama is facing are inherited ones, such was the wave of euphoria that greeted his election that people generally expected him to make an immediate positive impact upon the US economy. In contrast however, the turn of this year produced a string of indicators far gloomier than anticipated. Unemployment was up again in December 2009, by 85,000, to reverse a slight drop in November and the expect consumer spending at Christmas time failed to materialise with a 0.3% drop in retail sales in December, from November, surprising all analysts and leading to predections of a longer climb from recession than had been anticipated.
It is against this backdrop that President Obama has hit out at the banks that received unprecedented state help when the recession struck. A controversial TARP (Troubled Assett Relief Program) bailed out struggling banks to the tune of $250billion, with the money coming from the taxpayers pockets at a time when they were feeling the pinch. Whilst TARP was successfull in preventing further financial giants following the path of Lehman Brothers and AIG the public have been horrified by the bonus culture continuing unabated.
It had been widely anticipated that President Obama would announce a $90billion tax on banks but today he went further and announced a $117billion levy on financial institutions whose assets are in excess of $50billion. Around 50 companies are likely to be affected, including the Stateside operations of groups such as Barclays and RBS.
In a surprisingly aggressive speech the President refused to pull his punches telling the banks: “We want our money back and we’re going to get it!” and “My commitment is to recover every single dime that the American people are owed… my determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at the very firms who owe their continued existence to the American people.”
Whilst this will raise cheers from the American populace it casts a further gloom over the banks themselves and in the short term the banks may seek to recoup this levy by raising the cost of borrowing. It may yet turn out that the money that the fat cat banks pay back may once again come from the pocket of Joe Citizen!
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