“Financial Crisis Responsibility Fee” = The Cover Tim Geithner’s A** Tax
Photoshop/CoC card set credit: Tennyson Hayes
It’s not quite the Mother of All Distractions, but it’s up there. Maybe the First Cousin of All Distractions.
The White House unveiled its ballyhooed $90 billion plan to punish banks with a “Financial Crisis Responsibility Fee” this afternoon. It’s faker than the fake garden vegetables the First Lady served up on Iron Chef.
How does this fakery grow?
1. The bank tax will inevitably be passed on to consumers and the White House has no way of stopping them from doing the dumping.
2. The tax won’t apply to non-banks, black holes Fannie Mae and Freddie Mac, or the bailed-out auto companies.
3. This isn’t about getting “our money” back. It’s about redistributing it again under the guise of faux populism.
More to the point, this is what I call the Cover Tim Geithner’s A** Tax. Making banks the whipping boys takes the heat off Geithner for his incompetent, complicit, and transparency-subverting tenure as New York Federal Reserve chair.
Team Obama wants you to keep your eyes on its fatcat barbecue charade.
But don’t be distracted. Geithner will be on the hot seat next week in Congress. And that’s where the real scrutiny of “financial crisis responsibility” lies.
The WSJ weighs in on the secret backdoor bank bailout deals approved by the NYFed under Geithner:
Given the sweet deal and the fact that Mr. Geithner sought to keep secret the identities of the beneficiaries, logic would suggest that the AIG intervention was intended as a bailout for these counterparties. Supporting this conclusion is the fact that Mr. Geithner has sold his plan to regulate derivatives as a way to prevent such problems in the future. Yet when asked directly by the inspector general for the Troubled Asset Relief Program why he opted to buy out the counterparties at par, Mr. Geithner said “the financial condition of the counterparties was not a relevant factor.”
Then last November, he suggested that the systemic risk was in AIG’s traditional insurance business. “AIG was providing a range of insurance products to households across the country. And if AIG had defaulted, you would have seen a downgrade leading to the liquidation and failure of a set of insurance contracts that touched Americans across this country and, of course, savers around the world,” he said. So which was it?
Taxpayers also still haven’t been told why there couldn’t have been any sunshine on Mr. Geithner’s beloved AIG counterparties. If some of them really would have failed, with systemic consequences, why not announce that they were all getting a deal to bolster liquidity and allow them to resume lending? That is exactly what regulators had just done in October 2008 by naming recipients of TARP capital injections.
On the other hand, if the counterparties weren’t the systemic risk, then what’s the argument for regulating derivatives?
The evidence builds that AIG’s “systemic risk” wasn’t a mathematical answer to a rigorous and thoughtful review of data, but rather a seat-of-the-pants judgment by regulators in a panic. If that is the case, someone should ask Mr. Geithner why the American people should give him even more authority to make more such judgments from his hip pocket—with little public scrutiny.
Under the House regulatory reform, Mr. Geithner would chair a new Financial Services Oversight Council. The council could declare virtually any company in America a systemic risk, making them eligible for intervention on the taxpayer’s dime. The law firm Davis Polk reports that since this council is not an agency, it will not be subject to the Administrative Procedure Act, the Freedom of Information Act or the Sunshine Act, among other laws intended to allow citizens to scrutinize government.
It’s difficult to learn and apply the lessons of AIG because the New York Fed has done so much to conceal them. Mr. Towns appears to be getting closer to the truth, deciding yesterday to issue subpoenas focused on the New York Fed’s decision-making, as opposed to whatever it told AIG to say in public. Let’s hope lawmakers explore what the “systemic risk” actually was—and why Mr. Geithner should get nearly open-ended power to define it again.
Remember: As commenter Flyoverman put it best, “The only ethics committee with any clout is an informed electorate.”
***
Tom Elia on the same wavelength:
Obama Administration officials estimate that losses from the TARP program are around $120 billion, and argue this new tax will pay for those losses.
However, much of the estimated loss from TARP comes from the auto industry bailout.
So what appears to happening here is that the Obama Administration and congressional Democrats are attempting to levy a tax on financial institutions — some of which never received TARP funds, some which have already paid them back — in large part to pay for the bailout of the auto industry, a bailout which greatly favored the autoworkers’ unions, a Democratic Party constituency.
And they’ll use as political cover for this the populist anger — much of it deserved — over the financial bailout. However, make no mistake: much of this will in reality be a transfer of wealth from the financial industry to a Democratic Party voting bloc.
…Update: Here’s an ABC News interview with one of President Obama’s top advisors, Valerie Jarrett:
Note well Jarrett’s comment (at about 0:43), “…what I would say to them from a PR perspective is: How does it look to pass on those fees to your customers….”
Of course that’s exactly what the Obama Administration and the Democratic Party are doing to the US taxpayer in this obvious attempt to hide this payoff to its union constituency!
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Categories: Subprime crisis,Tim Geithner
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Perhaps a review of Rev Wright’s tapes and a few excerpts from Obama’s book would make things really clear what the Alinsky way is all about. Rush had a really good summary dissertation today.
So, how long before Geithner has to resign due to some family/personal/whatever problem?
I keep having to ask, just where is the Constitutional Authority for the PRESIDENT to place FEEs on Private Corporations?
They are not even trying to pass this off as a Tax…
And hmmmm… would this not be punishing them… and thus be a bill of Attainder even if passed by Congress?
“The complex demands of the modern economy and inflexible administration overwhelmed and constrained the central planners. Corruption and data fiddling became common practice among bureaucracy to report fulfilled targets and quotas thus entrenching the crisis.”
Wikipedia entry on the Soviet Economy
This “fee/tax/bribe/kickback” whatever the Obummer administration is calling it is highly unconstitutional but who cares about that? Certainly not the Dems or the Obummer administration. They’re too busy dismantling and shredding the Constitution as they go along.
I mean, how can they possibly get away with this…. after the Big Banks basically paid back the TARP with interest, and yet, they are still accused of not paying back taxpayers’ money. I don’t get it. They did what they were supposed to do. Now the Obummer administration has seen fit to appoint winners and losers. Winners will be the big mortgage companies like GMAC and car companies like GM and Chrysler. Losers will be Wall Stree and Big Banks that had the audacity to pay out bonues as they were contractually obligated to do.
Sigh… is it April Fools Day yet? Seriously…. this should be a lesson to those who take money from the government. You’re never done paying them back. Never.
And neither is the taxpayer who will ultimately have to cough up more bank fees for this.
This bill will be DOA on arrival. It will get plenty of MSM coverage providing endless opportunities for our entrenched criminal class of elected weasels to pose as defenders of the people by grandstanding with speeches of moral indignation but in the end, it will be quickly killed by the same indignant weasels.
I think this is cover for giving out bonuses. The “punishment” gets passed on to consumers, and the fat cats get their bonuses, while the Administratyion will declare “we showed them”.
MM – great analysis. The MSM will be right on it. I’m thinking H#ll will freeze over first.
My advice to all is go with a locally owned bank. Check them out for solvency via bankrate.com and see how they are rated. Go into your branch and ask the important questions about money loaned vs. money on deposit. We had some money in GMAC aka: Aly Bank and when we withdrew the CD (facing penalties) they were told we didn’t want to deal with any bank that had received bail-out $$$. They denied they had received bail-out so my husband said “in that case, I still want my money returned because I don’t do business with liars either.”
This is not exactly what Obama tried to pretend today.
What Obama is actually trying to do is to create a new revenue source for TARP. By creating a new fee on banks, to be paid directly to the TARP fund, Obama is planning on having a permanent slush fund placed directly under the control of the executive branch.
If you listen carefully, in this address, he extends the TARP program for a minimum of 10 years!
There are no “good guys” in this battle. One side is as corrupt as the other. It’s like watching a war between the Pots and the Kettles. Solution? Reinstate the Glass-Steagall Act. Break them up. The bonus problem will take care of itself when the investment bankers are no longer speculating with savings/checking accounts deposits and life insurance companies reserves. With less money to speculate with, they will have smaller scale of operations to justify their ridiculous bonuses.
Let them fly away to European and other banks. We’ll be fine once our commercial banks go back to managing deposits and lending to homeowners and local businesses and when insurance companies return to the actuarial sciences.
The investment bankers can lose money on the cash in my pocket. They shouldn’t be overseeing anything but money intended for nothing else but speculation.
Exactly what candidate Obama told us what he planned to do during the election-redistribution of wealth and To Fundamentally Change America. Every time I hear some one say “Obama ran as a moderate” I want to scream “DID YOU LISTEN TO THE MAN-HE TOLD YOU WHAT HE WAS GOING TO DO”.
As he has two auto companies under his thumb, robbed the bond holders and creditors for the benefit of the unions we knew this was coming.
Obama is moving faster than I thought we would. But just think of the power he will have when he finally GMs the banks. Want to buy or sell, hold a job? Try doing so without a credit report. They fully intend to make your paper money useless.
All in Sal Alinkys plan; Control the banks. Little Timmy is expendable-power is the end in itself.
Okay, I’m not a ‘Constitutional Scholar’, but how does this tax jive with
…all Duties, Imposts and Excises shall be uniform throughout the United States
and
No Bill of Attainder … shall be passed.
I knew Timmy reminded me of someone…
Alien Life Form.
Never let a crisis go to waste. Man, is he milking this one.
Its a shell game to take your eyes off the real problem, so they can take credit for “fixing” it. Small well-managed local banks are part of the answer. Dont give your money to the big ones so they can give it to the government.
This is standard practice in government for decades.
In DC they are building a new metro line to Dulles Airport. How is it being financed? In part through an increased toll on the toll road used by commuters in Northern Virginia.
In Washington, DC it makes sense to charge people driving to work for a metro line they may never use…
That’ll teach those fat cat capitalist pigs who wear monacles and light cigars with rolled up $100 bills
/Chairman Obama
The thugs are just going after our money in another way.
I was wondering awhile ago when there were stories out there that the Obama administration was trying to convince banks to not pay back the money what was up with that. Now we know.
In WA ST they legilatures are looking at tolling mutliple highways to pay for a new bridge that only one of the highways is connected to. There reason is they fear that drivers will use the other highways to avoid the toll on the one with the bridge.
When oh when will the banks get a spine and take this to court? Now, I know the constitution has gone by the wayside when this bho became pres., but this whole bho, team and most of the dc bunch needs to be sued! The fed needs an audit to let us taxpayers know WHERE in the world all the money has gone? The first that needs the suit thing is dear timmy.
L
It is easy to see that no one in the administration has ever run a business and possibly never worked for a business. All costs are always passed on to the customer. Jarrett’s statement is just disingenuous, butt covering bull.
Where the phuck is my pitchfork and torch!!
socialists take taxes from the productive, and give to the nonproductive to secure future elections. this is nothing more than the taxing of the productive banks, to give to the nonproductive auto unions, and fannie, freddie, and aig. after all, the four guys on the s**tlist of congress paid the money back with interest. gm has paid 2 billion back, and owes 83 billion, while fannie and freddie each got 200 billion each, and are needing more. ditto for aig. now one has to feel a bit of simpathy for aig, which was forced by gietner to pay back the big boys like goldman sachs 100% when they should have gotten maybe 35%.
Hey Geitner, thanks for nothing! I got your “Financial Crisis Responsibility Fee” right here! (imagine any preferrable obscene gesture here)
The citizens originally approved the Toll Road, with the promise that, as soon as the construction was paid, the tolls would be dropped. Another promise, that was never intended to be kept by government.
Re: Geithner, Can you say Special Prosecutor?
PAYOFFS. IT”S THE OBAMA WAY.
Correct me if I’m wrong but Stephanopoulos on ABC last night said that the government confiscation of these bank “fees” would also be used to pay off the Big 2 AUTO BAILOUT! How the he** can that be justified by ay stretch of the imagination? Plus they want to take cash from banks that had nothing to do with the TARP fiasco in the first place.
They all should sue the crap out of the government as well as civil suits against Geithner and Obama. No immunity. These soft Marxists need to be made to pay a personal price.