Obama pitches bank tax to recover bailout costs

President Barack Obama today pitched his proposed tax on banks to recover the cost of bailing them out during the financial crisis, saying if they can afford billions more in bonuses, they can pay back the taxpayers, too.

The banks and Republican lawmakers oppose the tax, which Obama announced this week.

"We're going to pass this fee into law," the president said in his weekly radio and Internet address.

Congress must approve the tax and that was not assured, given the immediate opposition from Republicans. Democrats also appeared in jeopardy of losing their 60-vote supermajority in the Senate, with Democrat Martha Coakley in an unexpectedly close race against Republican Scott Brown in Massachusetts to fill the seat held for decades by the late Democrat Edward M. Kennedy.

Brown opposes Obama's bank tax. Obama was heading to Massachusetts tomorrow to campaign for Coakley.

The White House's decision to use the weekly address to speak about the proposed tax instead of the US response to the suffering and devastation caused by the earthquake in Haiti suggested one line of attack Obama would use against Brown on Sunday.

Obama spoke publicly about Haiti on Wednesday, Thursday and Friday; he was to do so again today.

The proposed 0.15 per cent tax would last at least 10 years and generate about $90 billion (£55bn)over the decade, according to administration estimates. It would apply to about 50 of America's biggest banks, those with more than $50 billion (£30bn) in assets, and include many institutions that accepted no money from the $700 (£430bn) financial industry bailout.

Obama said that although the banks were facing a "crisis of their own creation," the "distasteful but necessary" taxpayer-funded bailout prevented an "even greater calamity for the country."

Most of the banks have returned the money they borrowed, and Obama said that was "good news."

"But as far as I'm concerned, it's not good enough," he said. "We want the taxpayers' money back, and we're going to collect every dime."

Six of the biggest US banks are on track to pay $150 billion (£92bn) in total executive compensation for 2009, slightly less than the record $164 billion (£100bn) in 2007 before the financial crisis struck, according to the New York state comptroller's office.

Obama challenged those who say banks can't afford the tax without passing the costs on to shareholders and customers.

"That's hard to believe when there are reports that Wall Street is going to hand out more money in bonuses and compensation just this year than the cost of this fee over the next 10 years," he said. "If the big financial firms can afford massive bonuses, they can afford to pay back the American people."