As the Wall Street companies have begun generating profits and dolling out hefty bonuses to its executives, US President Barack Obama said that America now wants its money back which was spent to rescue these firms from economic crisis.
"We want our money back! And we are going to get it," Obama said as he proposed a 'financial crisis responsibility fee' to be imposed on major financial firms until the American people are fully compensated for the extraordinary assistance they provided to Wall Street.
"If these companies are in good enough shape to afford massive bonuses, they are surely in good enough shape to afford paying back every penny to taxpayers," Obama said.
"Now, our estimate is that the Troubled Asset Relief Program (TARP) will end up costing taxpayers around $117 billion. Obviously, a lot less than the $700 billion that people have feared, but still a lot of money," he added.
"The fee will be in place for 10 years, or as long as it takes to raise the full amount necessary to cover all taxpayer losses," he said, but was quick to clarify that this will not be a cost borne by community banks or small financial firms.
Only the largest firms, with more than $50 billion in assets, will be affected.
"And the size of the fee each bank owes will be based on its size and exposure to debt, so that we are recovering tax dollars while promoting reform of the banking practices that contributed to this crisis," he said.
Obama said that the US has endured the deepest recession it has faced in generations, and much of the turmoil was caused by irresponsibility on the part of banks and financial institutions.
"Firms took reckless risks in pursuit of short-term profits and soaring bonuses, triggering a financial crisis that nearly pulled the economy into a second great depression," he said.
These banks were rescued by the tax-payer's money. Through this fee and broader reforms that US seeks is not to punish Wall Street firms but rather to prevent the abuse and excess that nearly caused the collapse of many of these firms and the financial system itself, he noted.
"We cannot go back to business as usual. And when we see reports of firms once again engaging in risk bets to reap quick rewards, when we see a return to compensation practices that seem not to reflect what the country's been through, all that looks like business as usual to me," Obama said.
Obama proposes Financial Crisis Responsibility Fee
President Obama also proposed a 'Financial Crisis Responsibility Fee' to be imposed on the debt of the largest financial firms until the American people are fully compensated for the extraordinary assistance they provided to Wall Street.
"My commitment is to recover every single dime the American people are owed. And my determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at the very firms who owe their continued existence to the American people -- who have not been made whole, and who continue to face real hardship in this recession," Obama said.
"That's why I am proposing a Financial Crisis Responsibility Fee to be imposed on major financial firms until the American people are fully compensated for the extraordinary assistance they provided to Wall Street," he said.
"The fee will be in place at least 10 years, but even longer if needed to pay back every penny of TARP, (Troubled Asset Relief Program)," the White House said in a statement.
This will not be a cost borne by community banks or small firms; only the largest firms with more than $50 billion in assets will be affected. In fact, 60 per cent of the revenue will come from the 10 largest financial firms, it said.
