The Obama administration has decided to double-down on its class warfare and populist schtick in the wake of the loss of the Democratic filibuster-proof majority in the Senate with the win of Senator-elect Scott Brown. Teh Won has called on Congress to pass a 10-year tax on banks that received TARP money, even if the money, plus interest, was paid back; the cost to the banks is $90 billion over that period.
What could be wrong?
I don’t get it. The point of passing TARP, which Obama voted for while still a U.S. Senator, was to get the banks lending again, even though President Bush’s weaselly Treasury Secretary Hank Paulson turned it into a slush fund to keep capital-poor banks afloat by bailing them out, some being forced to take the taxpayer cash. The banks did recover and returned to profitability, which was one of the things that had to happen. Obama also continued to encourage banks to get back into the subprime loan business, guaranteeing those loans via Fannie Mae, Freddie Mac, and the FHA, which continues to go on despite the fact that foreclosures are still increasing at an alarming rate. So now Teh Won wants to slap a tax on these same banks after they did pretty much everything asked of them, especially paying the TARP money back with interest?
Obama has highlighted his “work” as a Constitutional law professor, claiming to be an expert. But with this tax, Teh Won appears set to have Congress ignore the Constitution by getting this tax bill passed, specifically this clause in Article I, Section 9 [emphasis mine]:
No Bill of Attainder or ex post facto Law shall be passed.
John Carney at The Business Insider, who says he was originally a supporter of the tax, makes a compelling argument that the kind of legislation Obama wants is an unconstitutional bill of attainder because of who is targeted. Carney explains what a bill of attainder is and puts forth six hypothetical scenarios that describe them. The biggest problem is that only certain banks will be hit with this tax; it ignores every other company bailed out either by TARP or directly, GM, Chrysler, Fannie Mae, Freddie Mac, and AIG. Read the whole thing.
In a related matter, Fannie Mae and Freddie Mac were fully taken over by the government last year and supplied with a maximum of $400 billion (split evenly) to get their acts together. With the administration’s expansion of subprime lending backed by Fannie and Freddie, along with its failure to address the still huge toxic asset problem (which is what TARP was supposed to fix), the two public companies are set to reach that $400 billion…in losses. How did Teh Won punish Fannie and Freddie and those who work for them? By having the Treasury say it would provide unlimited funds over the next three years to keep the companies from going under. But Teh Won wants to tax the banks. Unconstitutionally.
I hope he keeps up this kind of idiotic overreach. His leftist, statist agenda, his allies in Congress, and his shot at a second term will all be taking a permanent vacation.