US bankers moan at high cost of Obama’s new tax

The cost of President Obama's proposed new tax on banks and financial firms has emerged and, not suprisingly, bankers don't like it. Under the plan, Bank of America, the largest US lender, would owe $1.53 billion a year, while JP Morgan, the No 2 bank, would owe $1.52 billion. Citigroup would owe $1.37 billion and Goldman Sachs $1.16 billion.
 
Analysts and investors say the levy is not conducive to business. "The reality is that most or all of this tax will be borne by customers," says Sean Ryan of Wisco Research. "This is fundamentally a punitive endeavour".

But with Obama firmly behind measures to get back "every single dime" that taxpayers put into bailing out the banks, Wall Street's pleas for leniency are likely to go unheard.
 
Obama said yesterday financial firms can well afford the tax because of Wall Street's "massive profits and obscene bonuses". Over the next two weeks, the financial giants are set to unveil as much as $140 billion in banker bonuses.
 
"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," Obama said.

Bankers retort that the new taxes and regulations are in fact a hazard. "These myriad new rules, fees and legislative proposals represent a new, major risk factor for US banks" says David Hendler at CreditSights Inc.

"It's politics as usual," said Michael Holland, who oversees more than $4 billion at Holland & Co. in New York. "Wall Street is not particularly popular at this point and anything that forces the banks to give back is something that Washington views as effective politics."

Bank officials point out that the industry repaid $165 billion to the US Treasury last year plus eight per cent - or $12.9 billion - on the investment. Says Bruce Foerster of South Beach Capital Markets: "Trying to exact this last piece of flesh from the banks is the act of a politician, not the act of the President of the United States." ·