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News Now

Washington
Obama bank fee would not affect CUs
WASHINGTON (1/15/10)--President Barack Obama on Thursday announced a new Financial Crisis Responsibility Fee that, according to the U.S. Treasury, “would require the largest and most highly levered Wall Street firms to pay back taxpayers” for the assistance provided to them through the government's Troubled Asset Relief Program (TARP). “Over sixty percent of revenues will most likely be paid by the 10 largest financial institutions,” the Treasury predicted. There is no indication that the fee will affect credit unions. The fee will seek to recoup up to $117 billion in funds, and the Treasury has projected that the fee will bring in $90 billion in funds over a 10-year period. However, if the full $117 billion in funds have not been fully paid back within 10 years, the fee would remain in place until the full amount has been replenished. “It is our responsibility to ensure that the taxpayer dollars that supported these actions are reimbursed by the financial sector so that the deficit is not increased,” the Treasury said in a release announcing the fee. The fee, which covers “firms that were insured depository institutions, bank holding companies, thrift holding companies, insurance or other companies that owned insured depository institutions, or securities broker-dealers,” would “only be applied to firms with more than $50 billion in consolidated assets,” and small and community banks would not be subject to the fee. Domestic firms as well as U.S.-based subsidiaries of foreign firms will be subject to the fee. “The Administration will also work through the G-20 and the Financial Stability Board to encourage other major financial centers to adopt comparable approaches,” the release added. The fee will be assessed at a rate of 15 basis points, or 0.15%, of covered liabilities per year, and Federal Deposit Insurance Corporation-assessed deposits and insurance policy reserves will be exempted, “as appropriate,” from the fee, the Treasury added. The fee will be collected through the Internal Revenue Service, and the Obama Administration plans to “work with Congress and regulatory agencies in order to design protections against avoidance by covered firms.” Additional details on the fee will be released with President Obama’s upcoming budget.


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