(Corrects name of agency to Internal Revenue Service from
Inland Revenue Service)
WASHINGTON Jan 14 President Barack Obama will
propose a fee on Thursday to recoup from the country's top
financial institutions up to $117 billion lost on a taxpayer
bank bailout fund, a senior administration official said.
Obama will announce the plan in a statement at 11:50 a.m.
(1650 GMT), although full details will not be available until
his fiscal 2011 budget is released in early February. It will
then be subject to shaping by U.S. lawmakers in the Congress.
Here are some of the most important details of the
financial crisis responsibility fee to recoup losses suffered
on the country's $700 billion Troubled Asset Relief Program, or
* Obama's proposal will apply only to firms with over $50
billion in assets. No small or community banks would be subject
to this fee. Covered institutions would include bank holding
companies, thrift holding companies, insured depositories and
insurance companies that as of today own one of these types of
entities. Broker-dealers with assets greater than $50 billion
dollars would also be covered.
* Obama's bailout fee would be approximately 15 basis
points, or 0.15 percentage point, of covered liabilities. This
would be determined by looking at a firm's total assets and
subtracting their tier one capital, which includes their common
stock, disclosed reserves and retained earnings, and as well as
FDIC (Federal Deposit Insurance Corporation) deposits for
banks, or insurance policy reserves for insurance companies.
* About 50 firms are expected to be covered in some way by
the fee. Around 35 of them will be U.S. companies, and 10-15
will be the U.S. subsidiaries of foreign companies. The Obama
administration estimates that 20 to 27 of the U.S. firms will
be banking institutions.
* Insurer American International Group (AIG.N), saved in a
multibillion dollar rescue in September 2008, will not be
excluded from the fee.
* U.S. automakers who got bailout money will be spared
because they were deemed to be industrial companies for whom
the liabilities assessment made no sense.
* Also spared are mortgage giants Fannie Mae FNM.N and
Freddie Mac FRE.N, now in government conservatorship, because
the Obama administration did not see that it made sense for
taxpayers to effectively have money shifted from one pocket to
* TARP losses in the fiscal 2011 budget, to be released in
early February, will be projected at $117 billion, down from
$341 billion in the midsession budget review last year.
* The Obama administration will propose that the fee last
for a minimum of 10 years and for as long as necessary to
ensure all TARP losses are repaid.
* It expects to raise $90 billion over 10 years and thinks
that amount should be enough to cover all TARP losses. But the
fee will stay in place until every penny of TARP is repaid.
* The Obama administration proposal would exempt FDIC
assessed deposits and insurance policy reserves from the fee
calculation. These are reserves that are already in some way
facing an assessment, either to the FDIC, or through insurance
policy reserves. To avoid placing a double fee on the holdings
they would be exempt.
* Firms' liabilities would be determined by their regulator
and the fee would be collected by the U.S. Internal Revenue
Service and would go to the general fund of the federal budget
to ensure that the national debt and budget deficit are fully
protected from TARP loss, as is required under U.S. law.
* The Obama administration expects that about 60 percent of
the money raised by the bailout fee will come from the 10
largest financial firms.
* The fee will be levied on financial firms even if they
have already repaid capital received from TARP, as well as on
firms that may not have received any TARP money at all because
they benefited greatly from the stability TARP helped bring to
the U.S. economy, the Obama administration says.
(Reporting by Alister Bull; editing by Todd Eastham)