President Obama’s “Crisis Fee”: Good First Step, But Banks Owe Much More

Statement of Janet S. Domenitz, Executive Director

MASSPIRG

Boston, MA – MASSPIRG is calling the “Financial Crisis Responsibility Fee” announced by President Barack Obama yesterday a good first step toward paying taxpayers back for the money they lent out to boost the banks, and, thus, the economy.

“The President should be applauded for taking this step to make taxpayers whole,” MASSPIRG Executive Director Janet S. Domenitz noted. “But the banks got a whole lot more than the $90 billion the administration projects this fee will raise over 10 years.”  According to CNN, taxpayers have spent $3 trillion fixing the financial mess, with the Federal Reserve spending $1.5 trillion to date.

“This ‘crisis fee’ puts the banks on the right road, but there will be a long way to go toward recouping all the taxpayer dollars that flowed out of various government coffers and into the vaults of big banks,” Domenitz continued.

“Here’s the math: $90 billion represents just 13% of the taxpayer funded Troubled Asset Relief Program (TARP), and that’s not even counting the $1.5 trillion that the Federal Reserve chipped in to fix Wall Street,” Domenitz said.

“That taxpayer support worked – for the banking industry,” she continued. In fact, Wall Street and the big banks are expected to award themselves bonuses totaling at least $150 billion for 2009, according to calculations by the Americans for Financial Reform coalition.

MASSPIRG’s Domenitz argues: “Before the big banks get back to their business-as-usual big bonus splurges, they should be required to pay back the taxpayers in total – a debt that should cover both the $700 billion in TARP dollars and the appropriation and other support from the Federal Reserve, whatever that amount ends up being. Banks could start by paying back all of the other backstops, sweetheart loans, and capital infusions.”

If the top banks took back their yearly $150 billion in bonuses paid to big executives, and applied it back to their debt for ten years – they could cover the Federal Reserve’s $1.5 trillion bill.

“Taxpayers stand to gain from the President’s action. We should all urge him and the Department of Treasury to keep going down the long road which ends only when taxpayers have recouped every single dime,” concluded Domenitz. “Wall Street can wait, Main Street can’t.”