UPDATE 1-Obama bank fee could exceed $100 billion

Tue Jan 12, 2010 4:37pm EST

* White House seeks to recoup bailout costs with bank fee

* Bailout costs currently estimated at more than $100 bln

* Fee could be based on liabilities, exclude automakers (Adds updated loss estimate, details of bailout costs)

By Karey Wutkowski

WASHINGTON, Jan 12 (Reuters) - A fee being considered for banks could raise more than $100 billion if the Obama administration seeks to recoup the current estimate of financial bailout costs, but exact figures are preliminary.

A financial industry source in Washington told Reuters that many options on how to structure such a fee are being discussed, including basing it on the amount of a financial firm's liabilities.

The source, speaking anonymously because the fee has not officially been proposed, said officials are also discussing exempting automakers and insurer American International Group (AIG.N) from the fee, even though they are expected to represent a larger proportion of bailout losses.

The fee could be included in Obama's budget proposal for fiscal 2011 to help recover some of the taxpayer money used to bail out banks during the financial crisis, a senior administration official said on Monday. The budget request is expected to be sent to Congress in early February.

Talks about the details of such a proposal are fluid, including the amount of such a fee.

Treasury's latest estimate on the ultimate taxpayer loss from the $700 billion Troubled Asset Relief Program (TARP), that began in late 2008, is $120 billion, according to a government source.

However, Treasury believes that amount is a conservative projection and has repeatedly downwardly revised its loss estimates.

The bank fee proposal come as President Barack Obama attempts to take a hard stance against the huge bonuses that many financial firms are poised to pay out so soon after the financial crisis.

The legislation that created TARP calls for taxpayer losses to be recouped, but not until 2013, five years after the legislation was passed.

The exact amount of potential losses has been a moving target. In early December, Treasury dramatically cut its estimate for the total loss of the program to $141 billion from $341 billion earlier in the year.

The department then cut the estimate again to $120 billion.

Just this week, Treasury revealed its estimated net losses associated with TARP for the fiscal year ended Sept. 30, 2009.

It said the losses for the year would likely be $68.5 billion.

That estimate included losses of $30.4 billion for AIG and $30.4 billion for automakers, with $27.1 billion in losses from the Home Affordable Modification Program.

Those loses were somewhat offset during the year by a $15 billion profit registered from the capital injections in banks and $4.4 billion in profits from other bank investments, asset guarantee and lending programs. (Reporting by Karey Wutkowski; Additional reporting by Caren Bohan, David Lawder and Steve Eder; Editing by Tim Dobbyn)

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