Tomorrow is the fourth anniversary of TARP. Probably, there won’t be a lot of parties. Probably no one will mention it. Maybe you don’t even remember what TARP is. TARP was President Bush’s last-ditch effort to save the economy. In the face of a rapidly unraveling financial crisis, as many banks and insurers began revealing […]
Tomorrow is the fourth anniversary of TARP. Probably, there won’t be a lot of parties. Probably no one will mention it. Maybe you don’t even remember what TARP is.
TARP was President Bush’s last-ditch effort to save the economy. In the face of a rapidly unraveling financial crisis, as many banks and insurers began revealing that they were on the edge of collapse, President Bush pushed through a program for the federal government to buy assets and ownership from financial institutions to help stabilize them.
A big government intervention in the economy runs against everything that President Bush and conservatives in Congress stood for (or say they did). But desperate times called for desperate measures, and TARP was born with a whopping $700 billion dollars.
The result—although hotly highly debated—was generally a success. For the most part, the big financial institutions survived. There were no runs on the banks. The economy contracted, but hit bottom and has begun slowly moving back up.
To make sure that this kind of near-collapse doesn’t happen again, Congress passed the Dodd-Frank reform legislation. Except a lot of experts don’t think it will actually prevent another crisis.
So the titans of finance face a bit more regulation—although nothing that keeps them from returning to profitability, fat bonus checks, and continued “innovation” in financial chicanery.
And what do everyday taxpayers get for all this. Nothing, really. You might think that for all the trouble—the economic crisis, the layoffs, the foreclosures, the human misery—that the financial sector could contribute more to the common good. How about a windfall tax on profits as the banks come back to profitability while the rest of the economy continues to drag? Or how about a fee to build up a reserve fund against any future crisis? If not as penance for past since, then as goodwill against future ones? Or in gratitude for the assistance all the banks and holding companies and insurance companies received from taxpayers.
Or maybe I should say, not yet.
Comes now, finally, a serious proposal to ask the banks and financial wizards to pay back—and pay into—the common good. Rep. Keith Ellison (D-MN) has introduced “The Inclusive Prosperity Act” which would impose a Robin Hood Tax and raise some real revenue. Unlike other bills, it sets a small, but real tax on financial transactions (0.5% on stocks, 0.1% on bonds, 0.005% on derivatives) that could raise something like $350 billion a year.
This bill would put the US on par with France and Germany and other countries that are moving to institute a Robin Hood Tax.
Robin Hood activists are taking a lot of actions, visiting Congressional offices, and generally making noise today. Maybe you want to join them?
Editors note: Find out more about the Robin Hood Tax here.