Thursday, January 14, 2010

Accept some blame yourself

So President Obama and his goons in office have decided to tax banks for being successful. They are upset that they are making money after taking government assistance or TARP funds. Because you are making a lot of money right now you need to pay more to own up for your part in the financial crisis. They call it a "fiscal crisis responsibility" fee.

I call it bullshit. First, let me disclose I work for a bank and I own a number of bank stocks.

Where do I start on this? The fact that banks that did not take TARP money have to pay this tax? That banks that were forced to take TARP funds have to pay this tax? That banks that paid back the TARP money had to pay more to be allowed to pay the TARP money back? That the government acts like they had no responsibility whatsoever in this crisis? That their policies and backing of Fannie Mae and Freddie Mac did not contribute to the crisis? That the Federal Reserve just made $52 billion dollars- more than the Wall Street firms combined that caused Obama's anger- the same way the commercial banks did? That they want profitable companies to pay for the mistakes of the government (see General Motors).

Let's start with the source of the problem. The government. They have kept interest rates very low. So low it makes sense for a bank to borrow from the Fed and make money investing it, even in government securities. It was an easy win. You would have to be stupid not to do it. Banks are making money because the government allowed them to do it.

Of course the government doesn't realize how this tax will shoot them and the economy in the ass. The tax will be on the amount of risk that an institution takes. I guess it is their way to determine which banks may cause problems down the line. But let's think about it. Government officials are crying that the banks are not lending enough money. Could it be that the banks have tighten up their qualifications and no longer give out money to those they deem a risk? Thus to not only prevent themselves from losing money on a risky loan, they are avoiding paying a tax on that risky loan. Why even think about a risky loan at this time? This process helps curtail lending which will keep the economy in a state of flux even longer.

Which comes down to what I would like to see. I would like for these bank presidents to defends themselves the next time they are called to answer to a committee. Instead of being polite and cooperative, they need to defend themselves and call on the failures of the government. No more of this "we accept responsibility for our actions" bullshit. Tell the asshats in Congress that they screwed up as well and they are sick of being vilified. The bank people are much smarter than any of these politicians. They would school them. At the very least, it would be some interesting video to watch.

1 comment:

Hey Jo said...

We had our all employee meeting tonight and our CEO commented on how unfair that this tax will be to the banks that are strong and have paid back the TARP money and passed the stress tests. He was actually quite angry about it. I don't blame him.