What a difference a few months make. After months of deliberation, world leaders are inching toward a consensus on imposing some form of a tax on large financial firms, the Wall Street Journal reports.
In January, the Obama administration announced what was effectively a tax on financial firms that are "Too Big To Fail." The levy sought to not only reclaim "every penny" of taxpayer money put toward rescuing the financial sector, but was also intended to close the gap in the subsidies these firms receive by virtue of their size and implicit government guarantees.
The bank tax concept hasn't come without a host of objections from Wall Street. Financial industry trade groups have called Obama's proposed "Financial Crisis Responsibility Fee" punitive, claimed the costs would be borne by customers -- a claim that was ultimately backed by the Congressional Budget Office -- and have generally dismissed the tax as an exercise in populism.
But, as the WSJ notes, world opinion may be shifting. Germany, France and Sweden have made plans to impose some sort of bank tax, while U.K. authorities have already levied a one-time 50 percent tax on financial industry bonuses in London. At the June meeting of the G20 in Canada, the bank tax may be revisited to solidify international implementation, the WSJ notes.
As for the U.S., there's still a great deal of debate about the structure of the so-called bank-tax. Congress is leaning toward a fund that pays for bailouts before the crisis, but the administration has a different approach. Here's the WSJ:
The Obama administration prefers to impose a levy after a crisis, arguing that establishing a fund in advance could encourage bankers to take too much risk because the fund could become a way to finance troubled banks, rather than shut them down.
The administration's proposal would use a temporary government loan to handle crises and then recoup the money from banks later after a crisis. To recoup payments for the recent crisis, the Treasury has proposed a "financial crisis responsibility fee" on the short-term liabilities of banks with assets of more than $50 billion.