US Public 'Will Pay Obama’s $90bn Bank Levy’

Published on
by
The Telegraph/UK

US Public 'Will Pay Obama’s $90bn Bank Levy’

President Barack Obama's $90bn (£59.5bn) bank levy will largely be paid for by customers and investors and not the institutions themselves, the US's leading spending watchdog has found.

by
James Quinn, US Business Editor

Congressional Budget Office Director Douglas Elmendorf testifies before the Senate Budget Committee in Washington, DC. (AFP/Getty Images/File/Chip Somodevilla)

In a
report on the White House's plan
to impose a 0.15pc fee on
liabilities of banks with more than $50bn in assets in order to recoup money
lost through the $700bn Troubled Assets Relief Programme, the Congressional
Budget Office (CBO) said the impact on banks would be "small".

"The cost of the proposed fee would ultimately be borne to varying
degrees by an institution's customers, employees and investors, but the
precise incidence among those groups is uncertain," said the CBO in a
letter to Senator Charles Grassley, a leading member of the Senate finance
committee.

The CBO went on to say that customers could face higher rates for borrowing
and increased charges, while investors could face lower share prices. It
added that employees may receive less compensation as banks attempt to pass
on the fee.

The levy, which has yet to be legislated for, was intended to make major banks
- not taxpayers - pay for state assistance throughout the financial crisis.

Launching
the plan in January
, President Obama said: "I'd suggest you
might want to consider simply meeting your responsibilities and I'd urge you
to cover the costs of the rescue not by sticking it to your shareholders or
your customers or fellow citizens with the bill, but by rolling back bonuses
for top earners and executives."

The CBO also said the levy could also backfire by reducing the supply of
credit. "Before this proposal moves forward, Congress needs to
understand the consequences, good or bad," said Senator Grassley. "We
need to make sure...[the] public don't get another raw deal."

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