My initial thoughts on the Financial Crisis Responsibility Fee

After a week of hints, the Obama administration has finally announced that big banks will face recourse for their role causing this crisis and their subsequent benefiting from it.  The Financial Crisis Responsibility Fee will list ten years or however long it takes for the effected banks to repay the entire cost of TARP.  This is not $700 billion but rather the loss from investments and bailouts the government is expected to take.  The administration estimates the overall cost of TARP at $117 billion.

Any bank whose liabilities are more than $50 billion greater than its assets (well, it’s a little more complicated than that) will pay .15% on the amount greater than those liabilities.  Unfortunately, it won’t discourage big banks from staying big or getting bigger, but it will also avoid assessing fees on small and community banks.  I think it’s great that banks are taking the cost of their bailout off of the back of American taxpayers, just as the FDIC assesses fees on banks so that depositors don’t lose their money if the bank’s gambles go wrong.  It should also be popular on both sides of the aisle, but I can’t wait to see how financiers and their lackies denounce it.

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