WASHINGTON — Although the estimated costs of the Troubled Asset Relief Program have fallen markedly during the past year, the Obama administration's 2012 fiscal budget said the largest banks that benefited from the bailout should still be taxed to make up any cost to the government.
The administration first proposed a $90 billion "financial crisis responsibility fee" last year on institutions with more than $50 billion of assets that took Tarp money. But the latest budget slashed the cost of the tax to $30 billion to be paid over the next 10 years.
The administration said it had dropped the price as a result of declining cost estimates of Tarp. Treasury dispersed roughly $410 billion of the $700 billion allocated by Congress, but has recovered approximately $274 billion already, primarily through bank repayments and interest accrued.
In December, Treasury said that the lifetime cost of Tarp would be roughly $48 billion, but when including AIG common stock held for the benefit of Treasury outside of Tarp, the projected cost fell to $28 billion.
Still, the administration's budget said it was important "that the largest financial firms pay back the taxpayer for the extraordinary support they received."
"The administration's financial crisis responsibility fee aligns with the congressional intent of the Tarp legislation that requires the president to propose a way for the financial sector to pay back taxpayers so that not one penny of the government's Tarp-related debt is passed on to the next generation," the budget said.
The tax, which would require legislation to enact, would be structured in line with principles agreed to by the G-20 leaders and similar fees proposed by other countries, the administration said.
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