Holding the Financial Industry Accountable

Today, President Obama proposed instituting a Financial Crisis Responsibility Fee collected from the biggest and most leveraged banks and Wall Street firms that received taxpayer assistance through the TARP program saying:

We want our money back, and we're going to get it. And that's why I'm 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. 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.

This proposal specifically implements protections added by Congress to the TARP legislation, which were designed to ensure that the industry repaid taxpayers once these institutions regained their financial footing. The fee will also help discourage Wall Street from taking excessive risks at the expense of Main Street, ensure the TARP program does not add to the deficit, and help secure America's financial future.

Speaker Pelosi in support of the President's proposal:

Over the last two years, Congress has taken extraordinary actions to stem the tide of financial collapse and to guarantee that America's families and businesses have access to the credit they need. In the TARP bill, Democrats insisted on fiscally responsible provisions that hold Wall Street accountable by requiring the financial industry to repay the taxpayer and recoup all TARP costs.

Taxpayers must get their money back and the President's bank fee proposal helps ensure that they will. The Financial Crisis Responsibility Fee specifically implements protections added by Congress to the TARP legislation, which were designed to ensure that the industry repaid taxpayers once these institutions regained their financial footing. The fee will also help discourage Wall Street from taking excessive risks at the expense of Main Street.

In December, the House passed the Wall Street Reform and Consumer Protection Act -- the most comprehensive reform of our nation's financial system since the aftermath of the Great Depression. Wall Street Reform is founded on these same principles of fiscal responsibility -- that the costs of any future failures by 'too big to fail' financial institutions would be covered not by the taxpayers, but by the financial industry. We will continue to take action to guarantee Americans don't pay the price for others' greed and help secure America's financial future.

House Financial Services Chairman Barney Frank (D-MA) on President Obama's proposal:

President Obama's action today complies fully with the taxpayer protection language of the original TARP bill. His decision to do this before 2013 is a good one because there is no need to wait. In fact, the TARP program has been both more successful and less expensive than many critics feared and that allows us to move quickly now to repay the American taxpayer. I strongly support this proposal, and I am confident that the Committee on Ways and Means will be acting on it soon.

Last month, as part of the Wall Street Reform and Consumer Protection Act, the House passed a similar fee to ensure that all TARP funds will be recouped from the large financial companies that caused the financial crisis. This provision came from an amendment authored by Rep. Gary Peters (D-MI), which all Republicans voted against.

So where do Congressional Republicans stand on big banks and financial institutions taking responsibility for their actions and repaying American taxpayers? Congressional Republicans are siding with Wall Street, just as they have as they have all year, voting against restrictions on executive compensation and against the Wall Street Reform and Consumer Protection Act -- the most comprehensive reform of our nation's financial system since the aftermath of the Great Depression:

Congressional Republicans Side with Wall Street over Main Street

Rep. Spencer Bachus (R-AL), Ranking Republican on the House Financial Services Committee:

There is no way the Administration can design a tax on financial firms that will not be passed on to consumers and investors in the form of higher interest rates and increased fees. The tax will only drain capital from the financial system at a time when it's needed to create jobs and fuel economic growth.

The President addressed that: "What I'd say to these executives is this: Instead of sending a phalanx of lobbyists to fight this proposal, or employing an army of lawyers and accountants to help evade the fee, I suggest you might want to consider simply meeting your responsibilities. And I'd urge you to cover the costs of the rescue not by sticking it to your shareholders or your customers or fellow citizens with the bill, but by rolling back bonuses for top earners and executives."

Rep. Scott Garrett (R-NJ), a Republican Member of the Financial Services Committee:

Rep. Scott Garrett (R., N.J.) has said any tax or fee could hinder the economic recovery and further limit the industry's ability to extend more loans.

The President addressed that: "Ultimately, it is by taking responsibility -- on Wall Street, here in Washington, all the way to Main Street -- that we're going to move past this period of turmoil. That's how we're going to avoid the cycles of boom and bust that have caused so much havoc. That's how we're going to promote vibrant markets that reward innovation and entrepreneurship and hard work. That's how we're going to create sustained growth without the looming threat of another costly crisis. That's not only in the best interests of the economy as a whole; it's actually in the interest of these large banks."

Rep. Jeb Hensarling (R-TX), a Republican Member of the Financial Services Committee:

To think that banks will loan more money if you tax them is beyond economic ignorance.

The President addressed that: "The financial industry has even launched a massive lobbying campaign, locking arms with the opposition party, to stand in the way of reforms to prevent another crisis. That, too, unfortunately, is business as usual. And we're already hearing a hue and cry from Wall Street suggesting that this proposed fee is not only unwelcome but unfair -- that by some twisted logic it is more appropriate for the American people to bear the costs of the bailout, rather than the industry that benefited from it, even though these executives are out there giving themselves huge bonuses."