AP source: Obama to announce bank fees Thursday – Yahoo! News

Wednesday, January 13th, 2010 at 4:35 am

WASHINGTON – President Barack Obama plans to announce a new fee Thursday on the country’s biggest financial firms to recover up to $120 billion in taxpayers’ money used to prop up corporations during the economic crisis, a senior administration official said.
In proposing a multiyear levy on big banks, Obama is targeting an industry whose political deafness has vexed his administration. The $120 billion recovery goal is the most that administration officials expect to lose from the government’s $700 billion Troubled Asset Relief Program that bailed out banks, automakers and other financial firms.
Congress would have to approve any fee plan.
The proposed levy could put Obama on the popular side of public opinion that is decidedly against Wall Street and angry over shortfalls in a $700 billion bank bailout fund.
Obama’s announcement would come one day after the nation’s top bankers testify before the congressionally created Financial Crisis Inquiry Commission. The hearings come at an ultra-sensitive time for the banking industry. In addition to Obama’s fee proposal, Congress is writing a full-scale overhaul of financial regulations.
The administration official said Obama’s plan has been in the works since August and would seek modifications to the law that sent billions of dollars in bailout money in 2008 and 2009 to a flailing Wall Street that was approaching collapse.
The 2008 law that created the Troubled Asset Relief Program requires the president to seek a way to recoup unrecovered TARP money from financial institutions, but five years after the law was enacted. The administration’s plan raises a series of questions.
Administration officials already have ruled out a fee on financial transactions. An industry official said consideration of a levy now would be premature.
“Current law doesn’t trigger this tax proposal for another four years,” said Scott Talbott, chief lobbyist for the Financial Services Roundtable, an industry group for some of the largest financial firms.

Banks have been repaying their infusions, in part to get out from under compensation limits imposed on the bailout recipients. Banks have also paid dividends from the government help.

With public anger over the bailout still strong, Obama has embraced populist rhetoric in an effort to shame bank executives into paying back the government more quickly and their executives less lavishly.

Funds collected from such a levy would go to pay down the $1.4 trillion deficit amid the Obama-backed stimulus package and aid to Detroit’s automakers.

Washington spent about $245 billion to help banks in the Troubled Asset Relief Program, much less than President George W. Bush’s Treasury Department secured to keep financial firms afloat.

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