The conference committee for the financial sector over-regulation bill has struck a deal. One items bears some notice. There's a new tax on banks to pay for any TARP bailout shortfalls. Here's the language:
SEC. 1303. AUTHORIZED ASSESSMENTS TO RECOUP ANY TARP SHORTFALL.
Section 134 of the Emergency Economic Stabilization Act of 2008 is amended—
(1) by striking ‘‘Upon’’ and inserting the following:
‘‘(a) IN GENERAL.—Upon’’; and
(2) by adding at the end the following new subsection:
‘‘(b) AUTHORIZED ASSESSMENTS.—
‘‘(1) IN GENERAL.—The Federal Deposit Insurance Corporation is authorized to make risk-based assessments on financial companies in such amount and manner and subject to such terms and conditions as the Federal Deposit Insurance Corporation determines, consistent with the processes established under section 210(a) of the Restoring American Financial Stability Act of 2010 and in consultation with the Secretary and the Board of Governors of the Federal Reserve System, necessary to recoup any shortfall within the Troubled Asset Relief Program that would add to the deficit or the national debt, as identified by the Director of the Office of Management and Budget, in consultation with the Secretary.
To translate into English, let's say that a TARP recipient (General Motors comes to mind) fails to make a timely TARP payment, or even reneges on paying back altogether. This provision would let the FDIC (who runs the deposit insurance system) impose a tax on banks to make up this shortfall. So the banks would end up paying for another's irresponsibility.
Furthermore, this statute is absolute. Provided that the FDIC wants to do it, that the OMB director says the deficit would go up without it, and that the Secretary of the Treasury is informed, it's legitimate. The banks have no right of appeal.
Just another reason to oppose this horrible bill.