Monday, March 29, 2010
Germany’s government is planning to tax banks in order to discourage risky investment behavior and to create a reserve to fund future bailouts. The proposal comes after the country spent €500 billion ($679 billion) to rescue its financial industry in 2008. Large financial institutions would be compelled to fork over 0.15% of their balance sheet. The government of the United Kingdom is expected to propose a similar levy this week.
There is concern that the German levy is so small that the next crisis that requires a bailout could come before the fund is large enough to do any good.
Meanwhile, the U.S. government, led by President Barack Obama, wants to recover the billions of dollars it lost while bailing out the likes of Bank of America, Citigroup, JPMorgan Chase and Wells Fargo. The American plan would tax banks that have more than $50 billion in assets the same 0.15% of liabilities. However, given the Congressional support the financial institutions have in both the Democratic and Republican parties, there is a good chance that they will be able to water down even this limited proposal,
-David Wallechinsky, Noel Brinkerhoff
Germany 'to Impose Banking Levy' (BBC News)
U.S. Proposals for Taxes on Banks to Cover the Bailouts Gain Ground in Europe (by Matthew Saltmarsh, New York Times)
Banks Could Get off Lightly with Crisis Levy (by Anne Seith, Speigel Online)
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