Bailout

The punitive bank tax

By Felix Salmon

Jamie Dimon’s attempt to push back against the Obama administration’s proposed bank fee only goes to prove just how out-of-touch Wall Street really is:

Today, however, Dimon appeared to open another line of assault on the would-be reformers. His beef this time was about proposed levies to recoup the cost of bailing out US banks, the part of the reform agenda that is far less controversial. “Let’s all not call it a bank fee and call it what it is ? a punitive bank tax,” said Dimon.

OK, Jamie, let’s do that. You honestly think that would make it less popular? It’s a bank tax, and it’s being enacted so that banks, rather than taxpayers, bear the pain of the TARP bailout. That’s entirely right and proper.

Dimon has spent his whole life on Wall Street, and although he’s respected by Wall Street standards, he doesn’t seem to understand how weak that really is. Any popular opposition to the Democrats on this issue is very much that they’re too friendly to the banks, not that they’re too harsh. And the Republicans have worked this out: while they’re doing the banks’ bidding and opposing the Dodd bill, the language they use while opposing it in public makes it sound as though the Democrats don’t go far enough in terms of making the banks pay for their own mistakes.

Taking the bank fee, then, and renaming it the “punitive bank tax” is, I think, a jolly good idea — if only because it helps to remind people just how culpable Wall Street was in the financial meltdown, and how little it seems to have suffered.

Full post as published by Macroprudential on April 16, 2010 (boomark / email).