With financial reform passed this week, it seemed that Congress had found a way, through the proding and advocacy of Sen. Scott Brown (R-MA), to pay for major legislation without it adding to the defecit. The bank tax was removed from the bill, and it was paid for by using TARP funds to pay for it, as well as FDIC fees. See Democrats, you can have reform without added taxes! However, we forgot one thing…its the Democrat Congress, you get them to get rid of a new tax, they’ll find a way to put it in anyway.
According to The Boston Globe, Rep. Barney Frank (D-MA), architect of the bank bailouts, says he wants Congress to resume talks regarding a $90 billion bank tax as a seperate entity. He also used the article to take a jab at Republicans (shocking), saing that if a Republican wins in 2012, reforms would be watered down. His belief is that the large investment firms, Goldman Sachs and JP Morgan Chase, in particular, benefited most from the bailouts, and should pay for them.
What he forgot was that they didn’t exactly choose to be bailed out. It was a forced loan that the Feds made them take. It was the federal government, under Treasury Secretary Paulson, that forced these two banks to swallow up failing institutions like Bear Stearns and take the loans. Since that point, much of the money the federal government poured into this fiasco has been payed back. So what is the tax for if you got all the money back? At its best it’s a grandstand, at its worst it’s a shakedown. Also, this $90 billion tax will be passed down to customers thorugh higher bank fees and interest rates, so it would hurt the very customers the government is trying to protect.
Don’t get me wrong, some reforms had to be made, and the bill does help regulate OTC derivatives and sub-prime lending, two of the leading causes of the meltdown. Unfortunately, the way it’s being conducted is through added bureaucracy with a new agency, and this bank tax that Frank insists will still be put through before the end of the session will cause a decrease in available credit, which he admits too in the article, which will further retard the growth of businesses and job creation in the private sector. On the back of it, they still have the nerve to call anyone who tries to stop this shell game as being “obstructionist” and against reforms, or even in the bank lobby’s pocket. Perhaps if Democrats could approach more Republicans with ideas and have a cordial discussion with not just the New England Republicans (Snowe, Collins, Brown), but Republican members of the Finance and Banking Commitees, maybe better solutions would arise, and these shell games would stop. But no, the Democrat leadership is perfectly happy with this kind of decision making, as long as it doesn’t interfear with their “government knows best” attitude, and anyone who disagrees is a special interest puppet.