Obama's Bank Tax Could Hurt Consumers

WASHINGTON (TheStreet) -- The Obama administration's crusade against outsized bank profits and bonuses could end up hurting the mass of struggling taxpayers it's ostensibly aimed at reimbursing.

On Thursday, President Obama unveiled a much-talked about bank fee that will seek to recoup any lingering costs from the $700 billion bailout package over the next decade.

"My commitment is to recover every single dime the American people are owed," Obama said.

The president added that he has only become more determined to achieve that goal in light of "massive profits and obscene bonuses" at the country's largest banks, while the average consumer -- whose tax dollars helped prop up the financial system -- continues to suffer.

President Obama was looking for payback from the big banks on Thursday.

As a result, the administration proposed a fee that would target the biggest financial firms with the most leverage. The Financial Crisis Responsibility Fee would be a 0.15% tax on covered liabilities for foreign and domestic firms that operate in the United States, and have more than $50 billion in assets.

The fee would apply to banks, thrifts, insurers, broker-dealers and other companies with depository institutions, though no small or community bank would be required to pay. The bailout's loss leaders -- Fannie Mae (FNM), Freddie Mac (FRE) and U.S. automakers -- will be exempt from having to pay the fee, as will certain other banks that pay fees to the Federal Deposit Insurance Corp., at the government's discretion.

Obama's lofty goals seem fair and sensible prima facie. There is an inherent injustice in the rapid resurgence of a financial industry that was at the precipice of destruction not that long ago, while Americans are still losing jobs and homes, going bankrupt, and struggling to make ends meet.