COLUMNISTS To recoup expected losses from the federal bail-out of the US financial system, Congress is considering a bank tax called the Federal Crisis Responsibility Fee. This would be levied on all banks and financial institutions with $50bn or more in assets and would raise about $90bn during the next decade.
While I support the general concept, the tax paid by an individual institution should not be tied simply to its assets since these do not correlate closely with the amount of government help received. Instead, the tax for each financial institution should be based on the federal subsidies implicit in the two largest bail-out programmes – capital received from the US Treasury and gains from lower interest rates due to the bank’s bond offerings being guaranteed by the Federal Deposit Insurance Corporation.
