Obama bank fee could exceed $100 billion

By IBTimes Staff Reporter | January 12 2010 4:08 PM

A fee being considered for banks could raise more than $100 billion if the Obama administration seeks to recoup the current estimate of financial bailout costs, but exact figures are preliminary.

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A financial industry source in Washington told Reuters that many options on how to structure such a fee are being discussed, including basing it on the amount of a financial firm's liabilities.

The source, speaking anonymously because the fee has not officially been proposed, said officials are also discussing exempting automakers and insurer American International Group from the fee, even though they are expected to represent a larger proportion of bailout losses.

The fee could be included in Obama's budget proposal for fiscal 2011 to help recover some of the taxpayer money used to bail out banks during the financial crisis, a senior administration official said on Monday. The budget request is expected to be sent to Congress in early February.

Talks about the details of such a proposal are fluid. They come as President Barack Obama attempts to take a hard stance against the huge bonuses that many financial firms are poised to pay out so soon after the financial crisis.

In early December, the Treasury Department estimated the ultimate taxpayer loss from the $700 billion Troubled Asset Relief Program (TARP), that began in late 2008, could be about $141 billion.

Since then, Citigroup has repaid $20 billion in TARP funds to Treasury, and Wells Fargo repaid $25 billion. Also, Treasury has revised down its loss estimates in the past, meaning current loss projections could change.

Treasury said earlier this week that its net losses from TARP were estimated at $68.5 billion for the fiscal year ended September 30, 2009. That estimate included losses of $30.4 billion for AIG and $30.4 billion for automakers, with $27.1 billion in losses from the Home Affordable Modification Program.

Those loses were somewhat offset during the year by a $15 billion profit registered from the capital injections in banks and $4.4 billion in profits from other bank investments, asset guarantee and lending programs.

(Reporting by Karey Wutkowski; Additional reporting by Caren Bohan, David Lawder and Steve Eder; Editing by Tim Dobbyn)