Obama to announce New Big Bank Fees Thursday (1)

President Obama will announce new fees on “high risk” transactions carried out by big banks as part of a complicated White House effort to recoup bailout funds, address simmering anger over bank bonuses and simultaneously shield consumers from the bank levies.

“As the banking industry recovered, the President and the economic team felt it was important to discuss ways to recoup every dime for the American people more quickly than the law required,” a senior administration official said.

A senior administration official tells Fox the bank fees President Obama will propose in his 2011 budget will not seek to raise $120 billion, as some have reports have indicated. The currently estimated unpaid balance from the 2008 bailout program is $120 billion, but Treasury and White House officials expect that amount to decline in the coming months.

Under discussion since August, the fees are designed to discourage the edgier risk-taking investments such as derivatives, mortgage-backed securities or collateralized debt obligations that bigger banks used to pad their profits before the financial meltdown.

The top administration official, who spoke on the condition of anonymity, the size of the fee and the projected amount it will raise remain uncertain. Staff at the Treasury Department and the Office of Management and Budget are still calculating the likely 10-year returns.

The official said the fees will not seek to raise even $100 billion, but an amount in the high tens of billions that will recoup all of the unpaid balance of the Trouble Asset Relief Program (TARP).

The administration has already rejected imposing a straight fee on bank transactions for ordinary customers. It has also ruled out levies on executive compensation.

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Notes:

I haven’t read through this entirely but I picked up because the first few para’s remind me of a dog chasing it’s tail.