Looting Alert: Big Banks Threaten Constitutional Challenge to TARP Fee

The brazenness of the financial services industry knows no bounds.

The latest sighting comes in the form of a leak (or a plant? of the fact that Securities Industry and Financial Markets Association which is considering mounting a constitutional challenge to the proposed TARP fee of 15 basis points of uninsured liabilities announced last week.

The New York Times sets forth the logic, such as it is:

Wall Street’s main lobbying arm has hired a top Supreme Court litigator to study a possible legal battle against a bank tax proposed by the Obama administration, on the theory that it would be unconstitutional, according to three industry officials briefed on the matter….a bank tax might be unconstitutional because it would unfairly single out and penalize big banks.

The article does say clearly that this strategy would set large financial institutions against smaller ones, looked like a big stretch legally (constitutional law professior Lawrence Tribe was dismissive), and would further enrage a pretty cheesed off public.

So why is SIFMA giving this idea any consideration?

I have three possible answers: one is that the banksters have become so accustomed to getting everything they want that they are not prepared to be inconvenienced, and are willing to throw any and every possible roadblock to make that stance clear. A second possibility is that they see this sort of fee as establishing a precedent they do not like (more on that soon), and are therefore willing to engage in a disproportionate response to make sure it goes nowhere. The third is that this is simply Kabuki drama: the bankers are going to engage in ritual howls to convince the public that they are being treated horribly, when the fee is not that onerous and is sure to be watered down. This type of threat makes Obama look tougher than he is, and would help him solve his PR dilemma (that he has been far too accommodating to the banks, and now needs to look tough minded. So if the banks squeal, surely Obama is being hard on them, right?)

The first idea, that the banks have become habituated to getting their way, given the repeated, successful neutering of pretty much anything that looks like reform, the consumer financial services protection agency and derivatives being the showcases. One partial exception was that some of the worst credit card abuses have been curtailed. The flip side was that leaks from the bank stress tests presented the bankers as getting into regular, heated arguments with the Treasury. Back in the stone ages when I was young, no bank would dream of treating a senior regulator as an equal party, much the less getting pushy with them. So they could simply be reverting to form.

The second possibility, and this is consistent with the notion of arguing that the fee would discriminate against large banks, is that this fee would set a precedent that the banks might regard as dangerous. The fee applies only to banks with more than $50 billion in consolidated assets, and is 15 basis points of liabilities not insured by the FDIC. Now let us stress that 15 basis points is not a big charge; per the example shown (not terribly unrepresentative) it works out to 6 basis points across the entire bank.

The reason the banks may want to cut this sort of idea off early is that the Treasury allegedly has been planning for some time to make life difficult and expensive for very large financial firms. The idea is if they raise the cost of doing business for really big firms, they will be forced to become smaller to remain competitive, thus alleviating the TBTF problem. Put it this way: if McKinsey is talking about this stuff at alumni presentations (as it has been since at least last May) when McKinsey is advising the Treasury and the Fed (and the tone of the presentation is that this represented the Treasury’s plans), the plan to make it is already well known by those closer to the action.

Now this fee is hardly a big step down this road, but the view from inside the banking industry may be that any measures along these lines must be opposed.

Despite this talk of making it expensive to be TBTF coming from sources who clearly had the inside skinny, I discounted it when I heard it, simply because even as of then, the Administration had been so accommodating to the financiers I could not imagine it making such a radical change in course. And lobbyists might want to make sure absolutely no progress is made along this path.

As an aside, I’ve heard many commentators howl about the impact a move like this would have on lending, but I think they are barking up the wrong tree. Banks can borrow for nada from the Fed now and earn large spreads. If they are not lending now, it is that they see the prospective losses being high (accurate or overdone risk aversion).

I’d be curious to get feedback, but I think the bigger impact would be on the repo market. Banks and in particular broker dealers get a considerable portion of their funding through a pawn-shop like procedure in which they sell high quality instruments (originally only Treasuries) subject to an agreement to repurchase. Repos are used to raise cash that is then used as collateral (or securities that are accepted as repos are posted directly as collateral. A very big use is collateral for derivatives exposures.

Back to the main argument. The third possibility is that this is just posturing, I’m not certain how the winks and nods might have been exchanged, but the financial firms are playing along with the new “Obama is tough” posture to make him look like he has gotten a pound of flesh from them. The public will remember all the noisy protests, and won’t be paying attention when the legislation, which is not that tough, is inevitably watered down later. So Obama wins and the banks win. What’s not to like?

Obama has finally notched up his rhetoric to something that sounds serious, but given his history of bending over backwards, it will take a lot more than stern words to bring the industry to heel:

Those who oppose this fee have also had the audacity to suggest that it is somehow unfair, that because these firms have already returned what they borrowed directly, their obligation is fulfilled. But this willfully ignores the fact that the entire industry benefited not only from the bailout, but from the assistance extended to AIG and homeowners, and from the many unprecedented emergency actions taken by the Federal Reserve, the FDIC and others to prevent a financial collapse. And it ignores a far greater unfairness: sticking the American taxpayer with the bill.

Note this is the first time Obama has admitted to the banks getting tons of subsidies, much the less outlining the major types. Heretofore he has studiously avoided mentioning that, and has gone to great lengths to position the TARP as a profitable investment.

He must be getting desperate.

Update: I want to be clear that I don’t consider this measure to be well designed or thought out. This fee bears all the hallmarks of being devised quickly to create the appearance of Doing Something About Those Greedy Bankers. But what is disturbing, as James Kwak points out, is that this fee, despite the caviling, is that the funding advantage of large banks v. small has widened. It averaged 48 basis points from 2000-2007, and from 4Q 2008 to 2Q 2009, increased to 78 basis points.

Now the flip side is that measures like this, plus much greater capital requirements in general, and in particular on bigger firms, would force banks to save more of their profits and pay less in bonuses (you’d need to regulate them tightly to make sure they did not start making greater use of off-balance sheet vehicles to increase leverage). And I’d be much happier if the “TARP fee” were reconstituted as a “Yes, Virginia, We are Guaranteeing Your Liabilities Too Fee ” fee, as in insurance payments. While FDIC insurance regularly proves insufficient in a crisis, it’s better to have the industry at least paying some of its freight than none.

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  1. Francois T

    “He must be getting desperate.”

    You think?

    Take a look at Massachusetts. If such a liberal state is ready to elect a dude like Scott Brown…

    1. Valissa

      I thought Obama’s speech here in MA was very telling indeed, and people here are not stupid… we have an extremely well educated populace here. Many no longer believe anything he says and his allegiances to the banksters and insurance lobbyists are very clear, and they don’t benefit MA citizens who are quite ready to vote against the perceived Establishment.

      Look closer at Scott Brown (beyond the party rhetoric on either side) and you will see he’s actually a moderate Republican and that endangered beast can still win major elections here… he’s pro-choice lite and despite claiming to be against same-sex marriage he is pro civil unions (same sex marriage is already a done deal in MA). Keep in mind that 51% of MA voters and unaffiliated/independent and therefore have very little party loyalty even if they do tend to vote for one party over time. There are many independents and pissed off Dems (including most of the rank and file union folk) who are ready to vote for Brown as a big FU to the Dem Establishment and their current policies and that are not thinking along classic traditional Right-Left or Liberal-Conservative lines. After all, whoever gets elected has to run again in 2 years.

      1. alex

        Obama and the Dems have slit their own throats with their bankster friendly actions. Everyone other than the True Believers laughs at his “fat cats” rhetoric.

        Being in NY I don’t know much about either candidate, but I don’t blame people for sending a big FU to the Dems, even if only out of spite.

        1. popo

          Agreed. Amazingly, I think the Democrats don’t see it coming. They’re still rambling on about issues from two years ago — completely unaware of the fury growing in the American electorate.

          The carnage will be legendary. (And I say this as a Democrat).

  2. attempter

    I wrote about this too. I lean toward your first thought, that by now they’re psychopaths who simply can’t stop themselves. That’s almost always the theory which best fits the evidence.


    OTOH I don’t think it makes sense as bankster kabuki. It’s clearly kabuki on Obama’s part

    (get a load of this wimpy quote from the NYT article:

    Indeed, President Obama urged the financial lobby to stand down when he introduced the tax proposal last week: “Instead of sending a phalanx of lobbyists to fight this proposal or employing an army of lawyers and accountants to help evade the fee, I suggest you might want to consider simply meeting your responsibilities.”)

    but if the banks want to go along with the appeasment tactic surely it would be better not to engage in a high-profile public fight which could only highlight their incorrigibility and how corrupt the system is.

    That is, if they really intend to go ahead with this. Of course it could be meant to be nothing more than grumbling upon which they won’t follow through. But given their record, anything’s possible.

    I’d welcome such a lawsuit. I think the potential upside is much better from the public political education point of view.

    I found it especially evocative how their theory of the case would put them in the company of Confederate secessionists. That seems profoundly appropriate given how they are in fact attempting to “secede”, to abscond with the veritable country itself.

    1. Jim in SC

      Do you not think there is a closer analogy between the Robber Barons of the era immediately following the Civil War and the Banksters of today than between the Banksters and the Confederates (or Communists)? Cui bono? Just as the Robber Barons were the beneficiaries of the Civil War, the Banksters have been the beneficiaries of the financial crisis. It seems to me that our biggest problem is that the political class of both parties has come to see Banksterism as a viable career plan when they leave office. From Rahm Emmanuel to John Edwards, where does the political class go when they want to make a few (or more than a few) bucks?

      Besides, the leaders of the Confederacy were not tried after the war because there was fear among their political adversaries that the Supreme Court would declare that the South had the right to secede. Robert E. Lee was so popular nationally that New England newspapers tried to draft him to run for President against Grant. The Banksters, on the contrary, are popular only inside the Beltway.

      1. attempter

        I was referring to a passage in the article which said that the plaintiff’s theory of the case, that a particular group was being singled out because it was politically unpopular, has past analogues only with regard to some laws passed to disadvantage former Confederates.

        And on my own I made the analogy that just as the Confederates wanted to secede with part of the country, so these banksters really want a form of “secession” in that they want to steal the entire country while freeing themselves of any accountability to any law or civic morality.

        So in that sense they’re “like” the Confederacy but far worse.

        But I agree with you that in every other sense these are robber barons, and not much like the old Confederates (except in the sense of wanting slavery).

  3. kevin de bruxelles

    My guess is in line with Yves third option, that this response from the bankers is more Kabuki intended to make Obama look that much tougher in Massachusetts. This image as a crusading banker slayer should in theory allow Obama to leverage emotions up in order to support the corporocrat the Democrats are running in the Massachusetts Senate race. The timing of the original tax-the-bankers proposal was suspicious in that it tied in well with the plunging poll number of the Democratic corporocrat candidate. And this weekend Obama apparently has been using the opposition to his tax-the-bankers proposal expressed by the corporocrat the Republicans are running as a reason for asking people to vote for his corporocrat. For some strange reason the latest polls show the impeccable logic of his argument is just not working. It seems some people have had it with corporocrats of all stripes and are sitting out this election or just voting third party. Time will tell though, the health industry has a huge projected revenue stream guaranteed by the USG if ObamaCare passes. But I suppose with well more than 90 coporocrats sitting in the Senate, a way will be found to pass ObamaCare even if the Republican corporocrat manages to win.

    1. Doug Terpstra

      Our version of the old Soviet saw: we pretend to vote, and they pretend to represent us. In this newspeak, bipartisanship means it matters not which corporocrat party is elected to serve the kleptocracy. What matters is how the hypnotic game is played. Keep the sheep following the democratic pea and the dogs fighting uner the masters’ table.

    2. claire

      I agree with option #3. Also, it’s unlikely that the government will try to pass anything more onerous while this challenge is making headlines (and this can go on for a while).

      I still think it’s short-sighted of the banks, though. The next idiot to overtly try to bail out the banks after markets turn again is likely going to get lynched.

    3. Jason C. Rines

      I also agree with option three. The U.S. citizenship gets $90 B repaid over a ten year period. How much already to bailout AIG, how much already for TBTF banks, TARP, TALF & FDIC? I am up to $1.2 T already. What about the other X trillion in toxic assets bought at par? This thing is at least $2.5 T big and the citizens get back what, 1/2 of 1% most?

  4. Jefferson

    I find it highly unlikely the banks are willing to escalate the current situation into an overt legal battle with the Obama given the current political climate. A few words of grumbling are to be expected not dissimilar to the health insurers being forced to go along with Obamacare.

    In fact, given the amount of losses the government eventually will face due to the malfeasance of the banks, the big banks would be best advised to take their medicine now while the hit from TARP is minimal. Things are about to get much worse.

    Once the true extent of the losses from FDIC takeovers from CRE defaults not to mention the GSE hit, the banks will be grateful that they have already locked in only a .15% hit to their balance sheets.

  5. foolmeonce

    Do you think that this just might be a continuation of the dance between Obama and the Bankers where they skirmish over a $100b amidst great fanfare to cover for the $trillions in benefits and subsidies that have gone unnoticed in the mainstream.

    Consider the source of this story.

    1. Doug Terpstra

      Bingo! The Great Deceiver strikes again. Orwell underestimated the machinations of evil.

      Nothing gets past this group.

  6. Robespierre

    I pick what’s behind door number 3. It is all for show. Really, you would expect a consummated politician like Obama who knows that MA is now all for grabs to latch on the latest TBTF fraud-scandal (second liens) to help his political cause. So instead of coming out with some thing along these lines: “There are rumors of new mortgage fraud being perpetrated by the TBFB. To address this potential issue I have ordered the FBI to form a special fraud unit to investigate and prosecute mortgage fraud within the banking industry if any (current and past)”. Instead this has been the administration reaction and comments: ” ”

    So we know who is really in charge and they didn’t run for office and we for sure didn’t vote for them…

    1. nowhereman

      Yes, this is truly a no-brainer. Until we see some enforcement of the laws broken by these crooks, you know this is all, look over here, ignore the man behind the curtain, type theatrics.
      And don’t give me the “there may have been nothing “illegal” just “Immoral” crap. What’s Immoral is letting these clowns get away with it without at least trying. What about the mono-lines why are they getting off scott free? The mortgage brokers “ninja” loans? Betting against your clients? The list goes on and nary a peep.

  7. Siggy

    Too much theater in this administration in that this recent production needs to be reworked.

    Why not tax all Reserve System banks? Just tax the ‘primary dealer’ and all large banks more. In fact you could make the large bank tax absolutely draconian.

    Another thought, pass a law that requires that net tangible capital exceed say 25% of all liabilites before bonus dollar one is paid out. The singular loophole would then be by way of shares of the corporation as a bonus payment. Then, make the issaunace of such shares restricted for 5 years. Moreover, make the restricted shares inelligible as collateral.

    After all, its all only monoply money.

  8. Vangel

    What the hell is wrong with Americans when they support unconstitutional law? If the bill of attainer clause, which prohibits laws that are narrowly tailored that they single out individuals or small groups for punishment, applies in this case than the law has to be declared invalid by the courts.

    As the libertarians have argued, two wrongs do not a right make. They wanted the government to refrain from meddling and would have allowed the broker dealers and large banks go under. When the meddlers in Congress, who did not have the guts to hold banks accountable for their stupidity, started to take heat from the taxpayers they scrambled to try to ‘punish’ the very group that they helped survive by trying to propose and unconstitutional bill. Voters should oppose any laws that violate the Constitution.

    Those that support the bill should be able to give us a precedent where a company or individual that has already returned a sum of money with interest has been required to keep paying because some other company or individual is still in debt. The law is clearly designed to score some easy political points for the very idiots who created the mess in the first place. Voters need to check their emotions, start thinking logically, and throw out those members of Congress who put politics above the Constitution of the United States, during the next election cycle.

    1. Doug Terpstra

      Some sheep are awakening very gradually to the realization that our hallowed constitution was suspended some time ago, parts of it transferred to restrooms at the White House and the Supreme Court. You too may use it anytime you want if you can pay the price of admission.

    2. bob

      ‘If the bill of attainer clause, which prohibits laws that are narrowly tailored that they single out individuals or small groups for punishment’

      This is a very carefully tailored line of thought, too careful in my opinion. I smell neocon.

      The attainer clause applies only to criminal law and proceedings. Due process clause once again used to shield non-persons from law.

      Small groups is also a misnomer. The TBTF bank represent a majority of the assets in this country.

      I don’t agree with any of the bank or government behavior, but this smells like think tank.

      1. liberal

        “The attainer clause applies only to criminal law and proceedings.”

        False. USSC precedent says it applies to things like Federal employment. Many observers claim _those_ rulings will show that the law passed against ACORN is likewise unconstitutional.

        1. bob

          Well then, what about the small group of people penalized by higher income taxes in the top tax bracket?

          Again, IANAL, but this line of argument seems designed for TV to lead away from the issues of banks and banking, and into a general rant about the constitution, dirty liberals and the leftist press.

          You made it back to ACORN. Its the new three degrees to Kevin Bacon.

          1. DownSouth


            You nailed it.

            Thomas Frank describes the “logic” of these guys like Vangel and liberal:

            But the conservative movement in Washington, I’m not talking about grassroots voters in Kansas here. I’m talking about the conservative movement in Washington. And the whole constellation of think tanks and lobby shops and not-for-profits. And, you know, newspapers and fundraisers and all of this stuff.

            They believe this is an industry, okay? This is an industry that churns out this product. And one of the things that, I mean, it’s one of the things that they’re doing now is they excommunicate George W. Bush, deeply unpopular, so therefore, not a true conservative, right? So, that way they get to start over fresh. The problem with George W. Bush, the reason we’re in such a deep hole is that we never went far enough.

            As Tom DeLay has said, in his newspaper column, and I’m paraphrasing here. The problem with conservatism isn’t that it was tried and failed. It’s that it never really got– we never really tried it in the first place. So, what we have to do — and I’ve heard, conservatives have said this. “What we have to do is go back and deregulate all the way. We have to, you know, slash government. We have to tear that thing down. That’s what it’s all about.”

            And the amazing thing about this. This allows them to represent themselves as dissidents against the sort of established order in Washington. Even though they ran the established order for years and years and years and years.

            They’ve also excommunicated Alan Greenspan.

            Good luck with that one.

          2. bob

            DS, I think its much more insidious that that even. No doubt they have armies of people who sit around and think up BS like this all day. They are also now adapting, and extrapolating out their arguments for the non-paid “participants” who can yell at the top of their lungs very well.


            None of the stories I have seen on applying the bill of attainder line of logic cite law. My amateur knowledge of Constitutional law, use of wikipedia and common sense tell me that if they did, they would have to rely most on the Equal protection clause.


            How does yelling Equal protection clause sound? Not at all like a good right wing warrior.

            The bill of attainder is just vague enough to sound truthy, until you look up the details. By then the commercial break is already going.

          3. liberal

            bob wrote, “Well then, what about the small group of people penalized by higher income taxes in the top tax bracket?”

            It’s not a bill of attainder; it’s public policy.

            “Again, IANAL, but this line of argument seems designed for TV to lead away from the issues of banks and banking, and into a general rant about the constitution, dirty liberals and the leftist press.”

            I’m not saying it’s a good or bad thing—I’m being descriptive, not normative. You claimed that the only bills of attainder forbidden by the Constitution only address expressly criminal proceedings. At least according to USSC rulings, you’re wrong.

          4. bob

            The definition of bill of attainder is based on english common law dealing only with criminal law. It is very clearly written, in my opinion, in the constitution. There is a link above.

            I can find no evidence of any USSC ruling on this point. There are cases where it has been asserted, that does not mean it was asserted correctly.

  9. Doug Terpstra

    A tangential quibble:

    “The…the banks have become habituated to getting their way, given the repeated, successful neutering of pretty much anything that looks like reform … One partial exception was that some of the worst credit card abuses have been curtailed.”

    Au Contraire. The Kabuki law, which has not yet gone into effect (until next month), has actually made matters worse for the sheep.

    Shear before roasting: “Congress gave the industry nine months to prepare for the changeover. Many banks, as expected, used this time to put the squeeze on their current customers and boost income from new cardholders…[devising] legal loopholes that let them drive up the cost of having a credit card.”


    1. ifstone

      Yes, exactly right. The APR increases and other measures that banks and other credit card issuers have imposed mere seconds before the Credit CARD Act takes effect have made a complete mockery of the law. It might have been better if the CARD Act had not been passed.

      Citigroup recently notified me that they’ve figured out a very clever way around the prohibition on “hair-trigger” default, in which a very high APR was imposed immediately if a single payment was even a day late. Effective three weeks before the CARD Act takes effect, the nominal APR on my card goes from 8% to 30%, but they’ll refund 70% of the interest charges if I always pay on time. If a single payment is late, the 30% rate is imposed without any refund. (I’ve never been late with any payment on anything.)

      1. Yves Smith Post author

        Banks are now required to apply payments to the highest interest rate balance. They also have to go a minimum # of days from closing date to due date (can’t recall if 25 or 26), have payments due the same day of the month, allow for a teeny grace period (I am sketchy on details here) and end double-cycle billing.

        So some abuses have been curbed. The fact that they have come up with countervailing abuses is another issue.

        1. ifstone

          Yes, but this isn’t a new abuse — it’s an old abuse maintained by a tawdry ruse.

          The average APRs on my cards have gone up from about 6% to about 14%, right before the prohibition on raising rates on existing balances takes effect, and as banks’ cost of capital has fallen. Amex raised theirs two seconds before the CARD Act required issuers to let people opt out. This is in the absence of any misbehavior on my part, and this is a common practice.

          They’re surely pushing more people into default and bankruptcy, raising charge-off rates industry-wide, and making their good customers pay for their mismanagement.

  10. craazyman

    When small-time checking account and CD holders bolt the big banks for credit unions and local banks, that’s a good political signal.

    But it would be great if states, municipalities and bigger companies took their business elsewhere too.

    I’d like to think there are state treasurers, private company CFOs, etc. who understand that these banks and their methods of operation are a bigger danger to the U.S. than is Al Queda — based on the body count and financial cost.

    Eventually the looters would be left only to trade their positions back and forth, in a game of musical chairs. In the long run, they’d bleed each other to death.

    I’ve got to believe that there are smaller financial intermediaries that could offer a variety of capital markets and public finance services in place of the looters.

    The industry itself is sick with a form of diseased thinking, no doubt, but there probably are some good apples in there too.

    1. nowhereman

      After Goldman’s revelations about betting against their “sophisticated” client’s why anyone, and I mean ANYONE, have anything to do with these thieves?

    2. nowhereman

      After Goldman’s revelations about betting against their “sophisticated” client’s why would anyone, and I mean ANYONE, have anything to do with these thieves?

      there fixed it, sorry

  11. Steve

    Sadly, the last option tends to be one that is used all to often in most governments.

    I see it as a cousin to creating a very strict and unconstitutional bill that everyone protests, only to follow it up with a less strict bill, which is what they really wanted passed in the first place. In the end, the second bill is so much “better” than the first, so it is passed, with the majority of the public thinking they won a victory.

  12. DownSouth

    If we follow the President’s moves, it screams door #3:

    In a rally here, Mr. Obama did not explicitly say that the overhaul of the nation’s health insurance system was on the line, even though Democrats in Washington were devising contingency plans to salvage the bill if Mr. Brown wins. Instead, he highlighted his populist proposal to tax large banks, a theme that Democrats intend to carry through the midterm elections.


    The president, who was making his first political appearance of the midterm election year, acknowledged the anger, but he accepted none of the blame. He sought to cast the election as a choice between furthering a populist Democratic agenda or emboldening an obstructionist Republican one.
    “We have had one year to make up for eight,” Mr. Obama said. “It hasn’t been quick, it hasn’t been easy. But we’ve begun to deliver on the change you voted for.”


    1. DownSouth

      It seems Team Obama’s decision to play down healthcare “reform” and play up bank “reform” is an acknowledgement of what recent polls have been showing, and that is that, as far as the public is concerned, healthcare “reform” as currently constituted is political poison.

      But the Democrats are in deep trouble, because those same polls show Obama’s handling of the economy to be just as unpopular as his handling of healthcare:

      Do you approve or disapprove of the way Barak Obama is handling the economy?

      • March 2009

      • January 2010


      I suppose what the Democrats are hoping is that, since financial reform legislation hasn’t been fleshed out yet, they can trick the voters into thinking they intend to do something substantive in this area.

      The only thing keeping the Democrats alive is that the Republicans don’t offer a viable alternative.

      This truly is a beauty contest between two very ugly alternatives.

  13. Kelli K

    I have excerpted the relevant portion of Obama’s speech in Mass. yesterday. Judge for yourselves whether he fashioned this poorly designed fee for the inept Coakley to use as a weapon, or whether he is dressing it up to that end.

    “Now, what we’re proposing is to make sure that taxpayers get their money back from the rescue that we had engaged in at the beginning of this year, thanks to the bad regulatory policies of the previous administration. And so we asked Martha’s opponent what’s he going to do. And he decided to park his truck on Wall Street. (Laughter.)

    It was your tax dollars that saved Wall Street banks from their own recklessness, keeping them from collapsing and dragging our entire economy down with them. But today, those same banks are once again making billions in profits and on track to hand out more money in bonuses than ever before, while the American people are still in a world of hurt. Now, we’ve recovered most of your money already, but I don’t think “most of your money” is good enough. We want all our money back. We’re going to collect every dime. (Applause.) That’s why I proposed a new fee on the largest financial firms — to pay the American people back for saving their skin.

    But instead of taking the side of working families in Massachusetts, Martha’s opponent is already walking in lockstep with Washington Republicans, opposing that fee, defending the same fat cats who are getting rewarded for their failure. Now, there’s a big difference here. It gives you a sense of who the respective candidates are going to be fighting for, despite the rhetoric, despite the television ads, despite the truck. (Laughter.) Martha is going to make sure you get your money back. (Applause.) She’s got your back. Her opponent has got Wall Street’s back. (Applause.)

    Let me be clear: Bankers don’t need another vote in the United States Senate. They’ve got plenty. “

    1. alex

      Pathetic. Anybody who thinks Barack “Fat Cats” Obama and the Dems are tough on the banksters probably doesn’t know enough to find their polling place anyway.

      Not saying the Repubs are better, but Obama trying to sell that he and the Dems are tough on banksters will have the same persuasive effect as Nixon saying “I’m not a crook”.

  14. Max2205

    Unconstitutional as: ATM tax provisions, tax on cadellac health plans, MD sur tax on 1m plus income, I could go on and on.

    I hope they win and all these others get turned back

  15. Bob Ebel

    What has always surprised me since the TARP was created was the fact that the small banks didn’t file a class action lawsuit against the federal government for using tax dollars to bail out the insolvent big banks while the insolvent small banks were and still are being liquidated. The challenge of the TARP fee by the big banks might and in my opinion should be unconstitutional, but so should the original bailout that was not available for the “too small to save” banks. Pressure on this point ought to be brought bear in the blogosphere with hope that it would catch on and enter the mainstream media.

    1. bob

      I think smaller banks are operating under the conclusion that they can’t go against daddy.

      Bank and Banks are the same thing. There is no singular bank in the modern US. They are all completely dependent on each other, and more dependent on the banks at the top of the food chain.

      Prisoners dilemma- explains the behavior and lobby. The smaller banks might completely disagree with the bigger ones, but they can’t step out of line and survive.

      If they were to oppose the payments to the bigger boys, they would quickly find themselves out in the cold. Simply adding another day to clear checks and payments from big banks could ruin them. It would simply be called prudence by the big banks.

      What happened last fall was a demonstration of this. All of the banks stopped trusting each other, they would not lend to another bank. They all stand tight and hold onto what they have. This of course hurts the smaller banks, they have less to begin with.

      The best most smaller banks can do is voice approval for tighter state regulations.

  16. Franklin

    A century ago there was a president who went about confronting monopolies, dangerous business practices, and concentrated economic power. It was Theodore Roosevelt. Lincoln Steffens said about him, “Roosevelt was not a reformer in the White House; he was a careerist on the people’s side,” and this was an implied criticism for not doing enough in the way of reform. This about Roosevelt, with his energy and accomplishments! I read that quote recently and my god, did it make me think of Obama, only triple-times-over. Obama will be known as the Great Mollifier, unless he can put out a little more energetic clubbing of TBTF bank trusts with a bigger stick.

  17. Hugh

    This is a classic case of David Addington’s philosophy. (Addington was Cheney’s hatchetman and enforcer.)

    “We’re going to push and push and push until some larger force makes us stop.”

    Yes, it really is that simple.

  18. craazyman

    I’ve decided. I’m going to mount a constitutional challenge against the Federal Reserve’s 0% interest rate. It unfairly singles me out as a responsible prudent saver — for the big thrust up the rear window — and I’m a straight man. But rape is a violent activity no matter what the underlying proclivity. And that makes it not only unconstitutional but criminal. It certainly hurts — or “hoits” — as they used to say in Canarsie. It’s ‘tho ‘thore. And if you throw TARP in there, then it’s a cover up. Ha ha ha ha. Get it. “TARP” — “Cover up”. Ha ha. Anybody here from Brooklyn? Oh, I guess lots of lawyers. We call them “liars” down in Virginia, but it’s just an accent thing. I’m sorry but my rear hurts from all this unconstitutional activity by the big swinging you know whats. Time to chop them off —\—>, like that, once and for all. Let’s get back to being alive, not being “resources” and “consumers.” What a funny joke this all must be looking at it from someplace else. Like Madagascar. Unconstitutional? Ha ha hahaha hahahah. Never forget, these guys are the biggest shits in the bowl.

  19. Rickstersherpa

    I apologize if this has already been linked to, but Dan Froomking has an excellent article on the Rubinite capture of the Obama administration at the beginning, and for which I blame most of their current economic and political troubles. See http://www.huffingtonpost.com/the-news/reporting/dan-froomkin He describes each of the players, and how all of them link back and to Robert Rubin. And though the corruption of money is also present, it is really the group think and the corruption of their ideals in that they have convinced themselves that being grand and great on Wall Street is sufficient to save the Country.

  20. Get Real

    The bailouts were a problem masquerading as a solution.

    This tax is a problem masquerading as a solution to the bailout problem.

    2 (or 3 or 4 or 461) wrongs don’t make a right.

    Remember that the low interest rates that precipitated this meltdown were themselves a “solution” to the “problem” of the downturn after the tech bust.

    1. Jeremy Johnson

      Only way politically to do this is to equate it to a type of insurance like deposit insurance in which case it’s a fee and will have to be tax deductible.

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