ABA Banking Journal - April 2012 - (Page 4)
ABA ChAirmAn’s view | by kell kelly
Create jobs, not taxes
“The state of our Union is getting
stronger,” President Obama told Congress and the nation in his State of the Union address earlier this year. In support of that he added, “In the last 22 months, businesses have created more than three million jobs.” Yet, just a few weeks later, the President proposed a ten-year, $61-billion tax on the banking industry that threatens the very job creation he was welcoming. We are told that this tax only would be imposed on the very largest banks. However, whatever is imposed on the large banks trickles down to all banks. Just look at the Consumer Financial Protection Bureau. We now know it is embarking on a study of overdraft practices that will affect all banks. Its coming regulations on mortgages, likewise, will affect all banks. Saying that something only will apply to large banks is a false premise. Why would the administration propose a bank tax when economic growth is so important? The official explanation: The tax is intended to recover the Troubled Assets Relief Program’s (TARP) expected costs. Yet, ironically, about a week before the president announced his budget proposal, the Treasury Department said taxpayers already recovered $13 billion more than the $245 billion of TARP invested in banks. “The banks paid the money back, with interest,” declared a Washington Post editorial. ABA is fiercely opposing this bank tax, and our message is being heard. This tax is not only unjust, unfair, and unnecessary, it comes at a time when the economy needs more lending to create jobs, not less. Two members of Congress, Reps. Aaron Schock (R-Ill.) and Erik Paulsen (R-Minn.), both members of the tax-writing Committee on Ways and Means, understand the problem. They issued a “Dear Colleague” letter saying, in part, “it’s a mistake to increase taxes as our economy struggles to rebound.” They reminded their colleagues “that $1 of bank capital can support up to $10 in lending.” Obama’s bank tax would mean that some $600 billion in loans will not be made during the ten years the tax is being collected. As the congressmen put it: “This means that millions of small business loans would be in danger of not being funded.” And small businesses create most of the jobs. When a similar proposal was made last year, the Congressional Budget Office observed, “The firms paying the fee would not be those that are directly responsible for losses realized by TARP.” The losses occurred because of federal financial support to two auto makers, an insurance company, and housing programs. This is the wrong tax on the wrong industry at the wrong time. Banks are already struggling with hundreds of new Dodd-Frank Act regulations. A united industry has the strength to convince Washington that adding a new and burdensome tax on the banking industry will tighten credit and reduce lending. And that is the exact opposite of what it takes to create jobs for American workers and strengthen the state of the Union. n
“Whatever is imposed on the large banks trickles down to all banks” — Albert C. “Kell” Kelly, Jr., President and CEO, SpiritBank, Bristow, Okla.
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Table of Contents for the Digital Edition of ABA Banking Journal - April 2012
ABA Banking Journal - April 2012
Young CEOs: Our turn
Pass the Aspirin
What is your appetite for risk?
Top-performing big banks
ABA Banking Journal - April 2012