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President Vows to “Collect Every Dime” of Taxpayer Funds that Helped Big Banks

The real issue is “brother can you spare a dime.”

by on Jan.16, 2010

During the past two years, more than seven million U.S. residents have lost their jobs.

In this week’s address, President Barack Obama proposed a fee on major financial firms to recoup – on behalf of American taxpayers – the $700 billion paid out in TARP, saying, “we want the taxpayers’ money back, and we’re going to collect every dime.”

The latest populist appeal follows well-known political tactics used by both Republican and Democratic politicians to shift the focus from their lack of action on resolving issues. And one of the real issues that is at the core of the Troubled Asset Relief program – TARP–  is that almost three-quarters of trillion dollars of borrowed taxpayer money was spent with little if any positive effect on job creation.

During the past two years, more than seven million residents of the U.S. have lost their jobs. Moreover, our manufacturing sector – a great creator of jobs and wealth – is in tatters from the lack of industrial policies that all other industrial nations have long had.

U.S. taxpayers are outraged, to put it mildly, over the billions in Wall Street welfare payments they involuntarily made, which are now being recycled to financial executives in multi-million dollar bonuses. A clear majority are also against the auto bailouts. The banking bonus bumble is made more outrageous with U.S. unemployment growing to levels unseen since the Great Depression.

The fact that GM in a Security and Exchange Commission filing yesterday revealed that it is paying one Wall Street consultant on its Board, Stephen Girsky, almost $1 million a year is going to raise questions and increase the anger of opponents of taxpayer bailouts.

Policy Debates!

In a deft political move that has policy implications, President Obama is now proposing a Financial Crisis Responsibility Fee that would require the largest and most highly leveraged Wall Street firms to pay back taxpayers for the federal assistance provided, so that the TARP program does not add to the deficit. Whether the auto companies are mired in this populist controversy remains to be seen. Moreover, the bankers and Republican party are not going to embrace this bill.

Click on chart to enlarge to see taxpayer debt.

The President’s proposal will only affect the largest financial institutions with the most debt, so it will help recover the TARP funds and reduce the deficit.

However, the other issue is that not one financial reform measure has been passed a year and after the Wall Street meltdown. Moreover, it appears that the Senate will not do so. Here, Obama was almost candid.

“I’m going to continue to work with Congress on common-sense financial reforms to protect people and the economy from the kind of costly and painful crisis we’ve just been through. Because after a very tough two years, after a crisis that has caused so much havoc, if there is one lesson that we can learn, it’s this: we cannot return to business as usual,” Obama said.

“Much of the turmoil of this recession was caused by the irresponsibility of banks and financial institutions on Wall Street. These financial firms took huge, reckless risks in pursuit of short-term profits and soaring bonuses. They gambled with borrowed money, without enough oversight or regard for the consequences,” Obama said. “And when they lost, they lost big.”

No, we as a society lost big. And we need to start winning again through job creation and a growing economy.

Here is Obama’s pitch:

“Of course, I would like the banks to embrace this sense of mutual responsibility. So far, though, they have ferociously fought financial reform. The industry has even joined forces with the opposition party to launch a massive lobbying campaign against common-sense rules to protect consumers and prevent another crisis.”

“Now, like clockwork, the banks and politicians who curry their favor are already trying to stop this fee from going into effect. The very same firms reaping billions of dollars in profits, and reportedly handing out more money in bonuses and compensation than ever before in history, are now pleading poverty. It’s a sight to see.”

Well, it’s a nice populist pitch, but where are the jobs going to come from?

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7 Responses to “President Vows to “Collect Every Dime” of Taxpayer Funds that Helped Big Banks”

  1. JM in San Diego CA says:

    What about the dimes that went to ACORN?


    • Ken Zino says:

      Don’t hold your breath on that one…

  2. Bryan Morris says:

    You know, I don’t think folks connected with domestic auto companies should complain too much about government bailouts of industries who fought and bribed their way out of sensible regulation for years and whose own hubris brought them to the brink of oblivion.

    If it wasn’t for government bailouts of that type of company, GM and Chrysler would be taking the long dirt nap today. And the only reason Ford isn’t in the same boat is because they took out huge private loans right before the chickens all came home to roost.

  3. JM in San Diego CA says:

    ” fought and bribed their way out of sensible regulation”

    To stay on your good side, do I need to pretend that ALL the regulation has been sensible? I can’t and I won’t. With modest effort, I can identify auto regulations that are purely “Nanny State Gone Wild” extremism. To wit:

    (1) Corporate Average Fuel Economy standards
    (2) Front and rear impact damage limitations
    (3) Passive passenger restraint systems

    Just because something CAN be regulated, doesn’t mean it SHOULD be. The issue is not, in my educated mind, whether the regulation does any good; it’s whether these matters are any of the government’s business. The answer is frequently “No.”

    For optimum health, we need to watch our weight, right? Should the government establish Personal Weigh Stations, complete with a schedule of fines for porkers? Ridiculous notion? Don’t bet on it.


  4. Bryan Morris says:

    There are few things more pathetic than a Libertarian clinging to his failed ideology while waiting in line at the unemployment office.

  5. JM in San Diego CA says:

    YOU are off my Christmas card list!

    Seriously, I’m a Conservative Republican, not a Libertarian, my ideology is hardly failed and I’m comfortably retired after 46 working years with not a single, solitary day of unemployment the whole time. (Three swings — three misses.)

    I think you’re being too bold when you throw an insulting adjective like “pathetic” at someone you barely know. Maybe it speaks as much about you as anything else you might say.


  6. Bryan Morris says:

    In 1980, Ronald Reagan ushered in the era of Neo-Liberal, supply side, trickle down economics. He essentially declared class war against the middle class and the poor on behalf of the rich. Every administration since then has supported this doctrine. And what has it brought us? The fundamental economic basis of the American middle class, manufacturing employment, has been exported wholesale to Asia and other low wage third world countries. The national debt has exploded mainly due to tax cuts for the rich and the increasing percentage of the budget needed to service the money we borrow from China to make up for deficits (almost all of the current national debt was accrued under conservative Republican presidents). Healthcare costs have skyrocketed and the health insurance and pharmaceutical industries use their money to buy enough political influence to effectively shut down any efforts to reform the system. Likewise, Wall Street owns both political parties and acts like a cokehead turned loose in the police evidence locker. They come up with one confidence scheme after another that create unsustainable bubbles that end up bilking the small investor and cost the rest of us jobs when they pop. Major corporate pillars like GM and Chrysler are bankrupt, others are long gone, mere shadows of there former selves, or just familiar brand name “fronts” for foreign firms. The Bush regime started two endless, financially ruinous wars that cost so much they wouldn’t even add them to the budget, much less make any attempt to pay for them. One, Iraq, was for no good reason. The other, Afghanistan, was mismanaged to the point where it’s now unwinnable. The American middle class is a receding dream for most. Likewise, the increasing cost of college is putting higher education, another traditional avenue for personal advancement, out of reach. High unemployment rates, low wages, lack of opportunity, and job insecurity are all now permanent facts of life. All this is a result of conservative Republican ideology, aided and abetted by “Democrats” who chase the corporate campaign donation by saying “See! See! We support business too, and we’re not lunatics like the tea baggers and birthers!”.

    Sorry if my “boldness” offended you, but I’m angry. The party and the politicians you have voted for over the years have permanently wrecked our country’s economy in the service of their financial backers endless greed. The party and politicians I’ve voted for over the years have either been ineffective in combatting the race to the bottom we’ve been in or have been complicit in supporting it. I’m happy that you’re enjoying your comfortable retirement with your Social Security and Medicare (single payer, government run health insurance). Unfortunately, yours is probably the last generation of Americans that will be able to. Except for the rich, of course. But hey, so long as they’re happy, right?