Fat cats

I have no problem in principle with President Obama’s plan to charge banks a fee until they’ve paid up all the money taxpayers spent to bail them out. After all, it seems they have an obligation to repay money that kept them alive. And the amount he’s proposing, spread over 10 years, won’t affect things much.

However, there are parts of Obama’s plan that have me concerned. (Read about it here.)

For one, the fee would apply even to banks that already have repaid what they were given. For another, it would apply to banks that never got any bailout cash in the first place. The president reasons this is OK because the bailout money prevented economic catastrophe, and so all banks benefited.

In hindsight, I now believe the bank bailout was necessary to calm a financial sector on the verge of widespread panic. The stimulus package passed later was not as necessary and has been less effective. But the banks that didn’t need help were the ones that managed themselves well and avoided unnecessary risks. They shouldn’t be punished.

Again, banks that received money should pay it back. But there is a troubling bit of populist pandering to what the president is doing. He continues to castigate bankers for their risky behavior without even a hint of acknowledgment that the federal government encouraged that behavior through years of efforts to get more loans to low-income people.

He’s also unreasonably angry at the banks that paid the government back and are now once more handing out big bonuses. Banks are in the business of making money. If they’re not using taxpayer funds, their bonuses shouldn’t concern Washington.

That’s how I feel. How about you?