Friday, January 22, 2010
Obama vs. Big Banks
This article discusses President Obama's statement on banking made yesterday. Obama announced that there will be stricter regulations on banks. There is a tax proposal to tax the nations 50 largest banks. This tax will raise $90 billion over ten years. The article involved a great deal of discussion over it being a populist stance. This article not only deals with a larger government involvement in private business, but the political decisions behind making such a decision. This seemed especially interesting because economic decisions are not made in an political vacuum.
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2 comments:
With more regulation on banks, the possibility for a financial crisis in the future seems less likely. More regulation will hopefully mean less future bailout money, more prudent investing, and a cut in the deficit. The bank tax is kind of like the administrations way, in a sense, to pay back the taxpayers for letting the banks borrow their money from the bailout. This tax could also dampen the effects of the big banks paying such high bonuses out. Even if not, the tax is related to the administrations disappointment at the banks to pay the bonuses after being bailed out by the gov't.
I think this could be a really good way to try and cut the deficit, especially better than increasing income taxes or consumer taxes. The only question I would have about it would be since banks are already not lending money out for fear of not getting it back, would that contribute in anyway to them continuing to not lend since they will be taxed more and essentially not have as much money?
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