I work in the banking industry and have seen a bunch of this coming for a while. No, it is not a party issue but Clinton did not help by some of their CRA mandates and the like. Fannie and Freddie both started taking on paper that should have never been underwritten in the first place. Once that made it "ok" most mortgage companies ran from there. I spent day after day looking at these mortgage companies and the garbage that was getting kicked back in the quality control process. Yes, a bunch of it was total garbage. I will admit that the republicans did a poor job of changing the regs to keep up with the flow of poor paper. I doubt that the dems would have done anything different at the time.
Now we are all in this big mess started by our own greed and lack of regulation. Taxing our way out of this will not work. Period.
Second of all, that kind of tax sends the wrong message. It says ok guys, you got in trouble, we lent you some money, you paid it back, we made a return on the investment and now we want to tax you for your mere existence. What the hell? The other thing that will happen is that if this goes through, they will come gunning at the community banks next. Other than make some bad acquisition and development loans, small banks really did not have much part in this whole mess. I can assure you of that. I have spent the bulk of the last year sorting through this credit mess on the community bank level. Once passed to the big guys, this will go down the line from there and yes, we will ALL pay.
No, I am not a huge fan of large banks. I think that they have their place but I prefer community banks. They have much better service at a tiny premium. That is where I bank. I don't shop at Walmart very much either but think that they should have the right to do their business legally just like the big banks.
A smarter way to do this would be to finish establishing a good regulatory process and then FINE the heck out of the offenders instead of just punishing everyone for guilt by association. If you just simply tax them all they will either figure out a way around this or pass it back. This has been proven time and again. Then we will be back to square one and all be out money.
The other screwy thing about this message is that at the same time, Obama is wanting to meet with these banks and have them start right back into the whole lending practice that started this whole mess in the first place. Talk about stupidity.
Randy is right, we first need to work through this mess. I can assure you that making more bad loans is not the answer. Bank want good business now. If you have the means of paying back debt and a good history, banks will line up all day long to lend you money. If you have that and can't borrow, you need to go to another bank.
This tax is a VERY bad message.
