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Obama Budget Proposal Again Includes Large-Bank Tax

Posted on 2/15/2011

President Obama yesterday unveiled a $3.7 trillion budget proposal for fiscal year 2012. The budget again includes an ABA-opposed tax on financial institutions with more than $50 billion in assets that received capital injections from the Troubled Asset Relief Program. The tax, which would require congressional legislation, is designed to generate $30 billion over 10 years and cover the remaining TARP costs. The large-bank levy is billed as a "financial crisis responsibility fee," although the administration announced recently that the federal government will make a substantial profit from its TARP-related investments in banks.

Last year's budget proposal included a large-bank tax that was intended to collect $90 billion over 10 years to cover TARP costs. Legislation containing the tax provision was never introduced because of strong opposition from ABA and others. ABA will continue that fight against this year's proposal.

The proposed fiscal year 2012 budget also would cut Small Business Administration funds by 45 percent. Most of those cuts would be to supplemental funds -- first provided in the 2009 stimulus bill -- that reduced borrower and lender fees and also raised loan guarantees. The administration believes that with an improving loan environment such incentives are no longer needed to meet credit needs, press reports said. View budget documents.

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