The chiefs of some of the nation’s biggest banks last week apologized for their risky behavior.
The apologies came as the bankers appeared before a special commission investigating the financial crisis. But the apologies did not deter President Obama from proposing a new 10-year tax on the biggest banks.
“We want the taxpayers’ money back, and we’re going to collect every dime,” Obama said.
Major banks should pay their fair share of the cost of saving the U.S. economy, the president said last week, and we agree. The first place they should look for money are the compensation packages for their top executives. Six of the largest U.S. banks are on track to pay $150 billion in executive compensation and bonuses for 2009 ”“ that’s far more than the tax urged by the president last week, which is expected to raise $90 billion over the next 10 years.
Bankers argue that most of them have returned funds they were given under the government’s Troubled Asset Relief Program. They also object that some of the biggest bailout recipients, including General Motors and Chrysler, aren’t subject to this Financial Crisis Responsibility Fee.
But it was the big banks and the irresponsible risk-taking of the financial industry that precipitated the crisis two years ago. Since then, the industry has benefited not only from TARP funds, but from money pumped into the financial system by the Treasury Dept. and Federal Reserve.
A year ago these banks wouldn’t lend to each other or almost anyone else. They might not be lending today, except for interventions on their behalf.
There was controversy over how to deal with the financial crisis from the start. Our belief is that the bailouts by the Bush and Obama administrations prevented a frightening crisis from becoming a financial collapse. Critics of this approach say that banks should have been allowed to survive or fail on their own, without aid from the taxpayers.
Now that banks are flush with money, perhaps both sides can agree on the next priority ”“ recovering taxpayer funds and imposing financial reforms so we can be ready in case greed and fear ever threaten our markets again.
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