Critics of the Obama administration's proposed bank tax have called the levy arbitrary, punitive and unfair. Now they may repeat those same claims in court.
The banking industry, the New York Times reports today, is hoping to stave off a tax that could cost the largest firms more than $1.5 billion each.
The Securities Industry and Financial Markets Association (SIFMA), the banks' top lobbying group, the NYT reports, is currently considering challenging the constitutionality of Obama's Financial Crisis Responsibility Fee. According to an email from SIFMA to Wall Street's banks obtained by the NYT, the tax "would unfairly single out and penalize big banks."
Since its unveiling last week, Wall Street insiders have been united in their claims that the fee is merely a populist, punitive and unfairly distributed political maneuver. Michael Steele, the chairman of the Republican National Committee, said the fee would be eventually passed along to bank customers and was "nothing more than another tax on the American public."
The Obama administration projects the tax could raise up to $117 billion over the next 10 years, and will target the liabilities of banks, insurers, thrifts and financial holding companies with combined assets of over $50 billion. Last week, President Obama said the lavish bonuses many banks are expected to announce were "obscene."
Wall Street insiders have been very vocal about what they see as inequities in the tax. During a conference call announcing the bank's fourth quarter earnings, JPMorgan CEO Jamie Dimon criticized the bank tax for making banks pay for the bailout costs of the auto sector and the insurance giant AIG:
"It might surprise you we generally agree with the concept that the industry should pay for its own clean up. But TARP got extended to a lot of things other than banks, like insurance companies and car companies, so I don't understand why we should be made to -- we've already paid for that."
Though the the details of the tax have not been finalized, Bloomberg estimated it would cost Bank of America $1.53 billion, or 22 percent of the bank's projected earnings per share in 2010. JPMorgan would be forced to pay $1.52 billion, or 12 percent of its earnings per share. Goldman Sachs would be forced to pay $1.16 billion and Citigroup $1.37 billion.
The tax has also provoked more than its fair share of vitriolic responses from the financial world. Bloomberg spoke to ex-Lehman executive Bruce Foerster, currently president of South Beach Capital markets in Miami, who had this to say of the tax:
"It's not a good use of the president's time to demonize banks or investment banks or hedge funds or any financial institution. 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."
Read the White House's fact sheet on the Financial Crisis Responsibility Fee here.