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“We want our money back, and we’re going to get it.” With that, president Barack Obama unveiled plans on January 14th to impose a special tax on America’s biggest banks. The proceeds would pay for the costs of the country’s bailout programme, estimated by the Treasury department to be around US$117bn.
Initial estimates circulated by analysts suggest that the tax could amount to between 10-20% of the largest domestic banks’ profits in 2010, and 5-10% at large foreign-owned lenders. But in relation to the overall size of the US banking industry—or the government’s budget deficit—the sums at stake are small.
The tax, known as the “financial crisis responsibility fee,” is essentially political theatre, deflecting anger away from Mr Obama and onto the banks. In the grand scheme of things, it will prove a small hit to bankers’ wallets, but a big one to their public standing.
Read more at Financial Services Briefing: “Taxing liabilities” (January 14th)