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US $19bn bank tax splits the Senate

Tuesday 13 July 2010 - by Ben Norman

The US Senate will vote this month on the Financial Reform Bill after three Republicans said they would back the measure following the gutting of the $19bn bank tax.

The death of Senator John Byrd has made it more difficult for the Democrats to reach the 60 votes they need to get the legislation through the Senate.

US Senator Scott Brown recently succeeded in getting the conference committee reconvened to strip out the $19bn tax on big banks in the Financial Reform Bill.

Brown argued that the tax would be passed straight on to the customers, while the new provisions would use capital already in the system.

Brown said: “If people think that the banks are just going to write a check for $19bn, they’re wrong. They’re going to pass it off to the checking account, and the ATM users, and the people getting loans”.



This measure will be replaced with money from the Troubled Asset Relief Programme and a premium on deposit insurance.

Senator Chris Dodd, the Bill’s main Democratic architect along with Barney Frank, thought that the tax “made sense”, but since “there was a reaction to it, we tried to come up with an alternative idea”.

Sen. Judd Gregg said that using the TARP funds in this manner amounted to fraud. Sen. Maria Cantwell signed on to the Bill after the removal of the bank tax, despite her previous determination to vote against the Bill because of its failure to tackle “too-big-to-fail”.


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