“My commitment is to recover every single dime the American people are owed,” Obama said in a statement.
“And 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,” the president said.
Aiming to distance himself from Wall Street amid mounting public anger over big bonuses at the banks, Obama accused the bankers of being out of touch with hardship endured by ordinary Americans who are grappling with double-digit unemployment.
Obama is to make a televised statement to announce the bank fee plan at 11:50 a.m. EST (1650 GMT).
The levy will recoup losses from a $700 billion taxpayer rescue of U.S. banks called the Troubled Asset Relief Program, or TARP, conceived in 2008 by Obama’s predecessor, George W. Bush, at the height of the global financial panic.
Forged after the collapse of U.S. investment bank Lehman Brothers and multibillion dollar rescue of insurance giant American International Group, TARP helped stem the crisis by injecting public capital into the biggest U.S. banks and convincing investors no others would be allowed to fail.
The action, together with massive monetary and fiscal policy stimulus from the government and Federal Reserve, was unable to deflect the country’s worst recession since the Great Depression, which has pushed unemployment to a 26-year high of 10 percent.
But that did not prevent Wall Street from raking in bumper profits as stock markets rebounded sharply in 2009. This has helped many of the banks repay their TARP injections, freeing them of government rules on compensation and allowing them to now pay out major staff bonuses.
FEW SPARED
Banks that have already repaid TARP capital will not be spared the fee, and nor will firms that got no TARP money to start with, but nevertheless benefited from the stability it brought to the U.S. economy, the official said.
Financial industry analysts said it would act as a drag on the sector, though the fact that the fee will be spread out over 10 years lessens the impact.
“It throws some sand into the gears. It’s one more thing dragging on the sector, but it’s spread over 10 years, so it’s not so consequential. It’s petty theft from bank balance sheets,” said Robert Albertson, chief strategist at Sandler O’Neill in New York.
Full details of the fee proposal will not be laid out until Obama delivers his budget for fiscal 2011 in early February, and will then be subject to shaping by Congress.
The plan, which needs approval by the U.S. Congress, includes a levy of 0.15 of a percentage point, on the balance sheets of big firms with assets of more than $50 billion.
The Obama administration expects to raise $90 billion over the first 10 years, and thinks this will ultimately cover all losses from TARP, although at the moment these losses are being projected at $117 billion.
AIG will be subject to the fee. But mortgage lenders Fannie Mae and Freddie Mac, which are under government conservatorship, will be excluded, as will still-ailing U.S. automakers that got bailout money.
Public rage at bankers, whom Obama chided in December for their “fat cat bonuses,” has taken on a deeper political dimension as Democrats who control Congress weigh sweeping financial regulatory reforms in the face of stiff industry opposition.
Wall Street chiefs were grilled on Wednesday at the opening hearing of a special inquiry into the 2008 financial crisis and the resulting taxpayer bailout to save their industry.
The White House said on Wednesday that an apology was the least the country expects to hear from the banks.
The heads of Goldman Sachs, Morgan Stanley, JPMorgan Chase and Bank of America faced the first public hearing of the Financial Crisis Inquiry Commission. It will convene throughout the year and is expected to issue a report by December 15.
