Proposed Financial Crisis Responsibility Fee

Posted on January 14 By Justin McHood

Today President Obama announced a plan to impose a Financial Crisis Responsibility Fee where many of the exact same Wall Street firms that helped the housing crisis ignite would pay back taxpayers for the TARP program.

The proposed Financial Crisis Responsibility fee would:

  • Require the Financial Sector to Pay Back For the Extraordinary Benefits Received:
  • Responsibility Fee Would Remain in Place for 10 Years or Longer if Necessary to Fully Pay Back TARP:
  • Raise Up to $117 Billion to Repay Projected Cost of TARP:
  • Fulfill The President's Commitment to Provide a Plan for Taxpayer Repayment Three Years Earlier Than Required:
  • Apply to the Largest and Most Highly Levered Firms:

The way that the proposed Financial Crisis Responsibility Fee would work is somewhat still yet to be fully determined, but the plan did outline some broad strokes.

  • The Fee Would Apply Only to Firms with More Than $50 Billion in Consolidated Assets
  • The Fee Would Cover Banks and Thrifts, Insurance and Other Companies That Own Insured Depository Institutions, and Broker-Dealers
  • The Fee Would Apply To US Firms and US Subsidiaries of Foreign Firms
  • The Fee Assessment Would Be Approximately 15 Basis Points of Covered Liabilities Per Year

Whether or not the proposed Financial Crisis Responsibility fee is actually imposed is not yet final - but it seems highly likely that soon the largest financial institutions in the world will be levied a fee (some are even calling it a tax) that is designed to repay some of the costs incurred recently by the US Government. This plan will clearly cost larger institutions more money - it is estimated that over sixty percent of revenues will most likely be paid by the 10 largest financial institutions.

Related Stories: NY Times: Obama Calls For Bank Tax To Recoup Bailout Bloomberg: Obama Says Bank Fee Aimed At Recovering Rescuing Money

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