Obama's Financial Crisis Fee

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In a move that surprises some observers, today the Washington Post weighs in against the Obama Administration’s proposed “financial crisis responsibility fee” – a budget proposal to require the “largest financial institutions” to pay $61 billion over 10 years to “offset the cost of TARP and the President’s mortgage refinancing program.” As the Post editorial notes, the Treasury Department turned a $13 billion profit on the $245 billion capital injection to banks, meaning “the banks paid the money back, with interest.”

So what’s the source of the TARP shortfall? According to the Post: “Treasury spent $51 billion for a majority stake in GM, $4.4 billion of which has already been written off and $23.3 billion of which has been recovered in a sale of stock to the public. That leaves $23.4 billion. If the government sold its remaining 500 million shares at current prices, it would receive roughly $12.5 billion, for a loss of $10.9 billion. The government got out of its investment in Chrysler at a net loss of $1.3 billion.

The Post argues that TARP “was the price the country paid for a public good – financial stability – that the country needed." It’s unfair, suggests the Post, for one industry to be on the hook for another’s bailout. 

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