Bank Tax, CO2 Auctions Recommended by Soros Panel to Help Climate Efforts

Earlier last week a United Nations panel issued a report recommending ways to fight global warming. The group suggested that taxing foreign-exchange transactions and auctioning pollution permits could raise $65 billion.

Bloomberg reports:

The panel, which includes billionaire investor George Soros and Larry Summers, director of President Barack Obama’s National Economic Council, said selling carbon-emissions permits would generate $38 billion and a financial transactions tax an additional $27 billion, according to the report released today.

The findings are intended to guide envoys at UN climate talks that start this month in Mexico as they seek ways to pay for $100 billion in climate aid that was pledged by 2020 to poor nations at last year’s summit in Copenhagen. The report found that the goal is “challenging but feasible” to achieve.

“Without agreement on finance, we will not be able to reach agreement on other issues for climate change,” Jens Stoltenberg, Norway’s prime minister and co-chairman of the advisory group, said at a press conference in New York. “Now we need the political will to take the decisions.”

UN Secretary General Ban Ki-moon appointed the panel, called the High-Level Advisory Group on Climate Change Financing, in February. It’s led by Stoltenberg and Ethiopian Prime Minister Meles Zenawi. The 21-member group also includes Soros, Summers and Deutsche Bank AG Vice Chairman Caio Koch- Weser.

Read more here

Bank Tax Tossed from Financial Reg Reform

From Forbes.com:

Sen. Scott Brown, R-Mass., threatened to vote against financial regulatory reform if it included what he called a "$19 billion bank tax." That tax is now off the table, but what's in its place may not be much better for banks.

The conference committee that drafted the final version of the overhaul bill—the committee thought it had finished its work last week--reconvened Tuesday evening to find other ways to pay for the legislation. However, the group of lawmakers from the House of Representatives and Senate ended up scrapping the bank tax. Instead, the bill would prematurely end the Troubled Asset Relief Program (the $700 billion bailout program from 2008), using some TARP money to help pay for the financial regulatory overhaul. In addition, the reform bill will raise the premium that banks pay to the FDIC's Deposit Insurance Fund. Financial firms with less than $10 billion in assets wouldn't be subject to the increase.

Is this a better deal? Depends on how you look at it. Bank tax or no bank tax, banks will still end up paying. In a statement Tuesday evening, Edward Yingling, President and Chief Executive Officer of the American Bankers Association, described the premium increase as "yet another regulatory cost imposed on the many traditional banks that had nothing to do with causing the financial crisis." He says he's concerned about using FDIC premiums as a means to generate revenue for the federal government, particularly without any debate. He says the new proposal is still "a tax on bank capital."

The "bank tax" would have imposed fees--no more than $19 billion by 2015--on large financial institutions and hedge funds to help pay for Wall Street reform. The Congressional Budget Office estimated that while the fees would have amounted to about $18 billion, the measure actually would have brought in about $13.5 billion in revenue because banks would absorb some of the costs as business expenses.

Banks: We're Hiring So We Can Make More Home Loans

Even though home sales are down, a handful of financial institutions are getting ready to hire more loan originators, so that they can increase lending. This should come as good news to the thousands of Americans finding it difficult to get a home loan. You can check out a segment of the story below, or read the full post at CNNMoney.com.

Several banks are gearing up to do a whole lot more mortgage lending in the future.

Even though new homes sales were at a historical low in May and the housing market in general is in the doldrums, these banks are hiring hundreds of loan originators, getting ready for what they believe will be a significant pick-up in lending.

JPMorgan Chase (JPM, Fortune 500), one of the nation's largest lenders, is in the midst of hiring 1,200 mortgage officers. "We may not be inundated with applications tomorrow, but we are confident the the need will be there," said Christine Holevas, a spokeswoman for JPMorgan Chase.

Housing experts, however, warn that overall mortgage lending is expected to remain flat, largely due to a decline in refinancing.

Loans for home purchases should steadily increase over the next two years to $916 billion, up from an expected $725 billion this year, according to forecasts by the Mortgage Bankers Association. But refinancings should plummet to $474 billion in 2012, down from $717 billion this year.

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Bank Tax Tops G20 Meeting Agenda

Finance ministers, representing 20 of the largest economies in the world, are meeting this weekend. They reportedly plan to discuss an international tax on banks, although it is unsure how many countries support the proposal. However, the group is not expected to reach a final agreement.

The IMF and World Bank are also holding their spring meetings in Washington this weekend. Ahead of those talks, smaller gatherings of central bankers and finance ministers will take place. Officials of the Group of Seven wealthiest nations will gather Thursday night, but the group has ceded policy supremacy to the larger G20, which will kick off their meeting Friday.

A U.S. Treasury official said he detected growing international support for a bank levy, but that the details needed to be worked out. The official said that not all countries would have to follow the exact same approach.

President Barack Obama has proposed a bank tax in his budget, aimed at recouping U.S. government spending on the $700 billion bank bailout.

The U.K. has also proposed a bank tax to protect taxpayers from future bailouts.

Not all G20 nations are supportive of the idea.

Continue reading at MarketWatch.com…

A Deeper Look at Obama's Plan to Tax the Banks and Wall Street

Obama first announced his plan to tax Wall Street and major financial institutions during his State of the Union address last month. The basic premise of his proposal is to impose a fee on financial institutions that received government money through the TARP program but have made little effort to repay the funds. Since the announcement, there have been plenty of articles written in support and opposition to the tax. To help my blog readers better understand Obama’s proposal, I decided to take a deeper look at his plan and have put together this entry explaining what I discovered.

Fee vs. Tax

During his State of the Union Obama referred to his plan as a “fee” on financial institutions. However, the proposal is actually a new tax, but since the word “tax” elicits such a negative connotation in the minds of most Americans the President intentionally used the word “fee” to help generate support for his proposal. Although the name does not affect the actual legislation, it doest make it more difficult for taxpayers to understand.

Bonus Abuse?

Obama explained that "if these firms can afford to hand out big bonuses again, they can afford a modest fee to pay back the taxpayers who rescued them in their time of need.”

The proposal definitely stems from the outrage being expressed by Americans in regard to the news stories of excessive bonuses being given to executives of financial institutions that received taxpayer money. However, the idea of targeting these banks specifically has created a lot of legal commotion. Many experts question whether the government should be allowed to institute this new tax, and have expressed concern about the long term effects of giving the federal government the power to levy a tax on one specific group of businesses.

Federal Revenue

In addition to pleasing taxpayers who are angry at banks for giving out large executive bonuses, the tax proposal would also generate a decent amount of federal revenue. Estimates say that the financial institution tax would generate nearly $120 billion over the next decade.

Wall Street Retaliation

One of the more common arguments against the bank tax is that when receiving TARP funds, the financial institutions were under the impression they had until 2013 to begin a repayment plan. However, Obama’s remarks in his State of the Union give the impression that these payments are already overdue.

Mounting Opposition

Although the Democratic leads in Congress have welcomed the bank tax, many Republicans are remaining silent on the proposal. However, financial institutions are already working to prevent the legislation. In addition to sending additional lobbyists to Washington, the largest institutions also have teams of lawyers working to argue that the tax is unconstitutional.

President Obama has already spoken out against the mounting opposition to his proposed bank tax. “Instead of sending a phalanx of lobbyists to fight this proposal or employing an army of lawyers and accountants to help evade the fee,” Obama asserted, “I suggest you might want to consider simply meeting your responsibilities.”

Financial Recovery

Perhaps the biggest question on everyone's mind surrounding the potential fee is whether or not it would help our country’s economic recovery or not. Many Wall Street executives have stressed that they are having a hard enough time recovering, and a new tax would only make more investors weary about spending their money.

Pass-on Fees

Although the popular sentiment among taxpayers is to let Wall Street pay for recovery on Main Street, many economists are predicting that the banks will just pass down the fees to consumers. These financial institutions are for-profit businesses, and will likely find a way to recoup any lost revenue due to new taxes from their customers.

Big Banks vs. Obama

From NewsWeek.com:

The big banks are considering challenging President Obama's proposed tax on very large banks and financial institutions in court as unconstitutional. Let's see if I have this right. The Federal Reserve deciding unilaterally, without public debate, to assume hundreds of billions of dollars of financial companies' liabilities, spent hundreds of billions to buy mortgage-backed securities and potentially expose taxpayers to massive losses: That's totally constitutional. Congress passing a law suggesting that a small portion of the bailed-out financial industry, which is still benefitting from massive government subsidies, pay a fee for running huge balance sheets: That's unconstitutional.

The industry has argued that the Obama bank tax would hurt the recovering economy because banks would pass on higher costs to customers and borrowers rather than eat them. Higher taxes mean less money available for lending. In theory, that may be true. But when you consider the size of the banks, the size of the tax, and the vast sums of money they squander each quarter because of poor lending decisions—the proposed banking tax is a drop in the bucket.

The tax amounts 15 basis points on the net liabilities of financial institutions that have assets greater than $50 billion and that received capital as part of the TARP or issued debt as part of the Temporary Liquidity Guarantee Program, which allowed banks to save hundreds of millions of dollars on interest costs. It would total about $90 billion—$9 billion per year over 10 years. Sean Ryan of Wisco Research in Madison, Wisc., calculated the expected tax hits for several institutions, which he provided to me. The bigger you are, the harder you get hit: Giants JPMorgan Chase and Citi would each pay about $1.5 billion per year, while a merely large bank like US Bancorp would pay about $100 million per year.

Bank Tax Unfair, To Have Serious Effects - Bank Group

From CNN Money:

U.S. banks are worried about the impact of a planned tax on lenders and believe other industries that received federal money, such as car makers, should be targeted, a top economist at a banking group said Friday.

"We're concerned that such a high tax directed at the wrong parties will have serious consequences," James Chessen, Chief Economist at the American Bankers Association, told a press conference presenting ABA's latest economic forecasts.

Thursday, President Barack Obama said banks have a responsibility to make taxpayers whole for the financial-sector bailout and should pay a proposed tax by rolling back big bonuses.

If approved by Congress, the new tax--which the White House calls a "financial crisis responsibility fee"--would force about 50 banks, insurance companies and large broker-dealers to collectively pay the federal government roughly $90 billion over 10 years.