House Republicans launched their opposition on Tuesday to a bank tax proposal the Obama administration is developing to recoup taxpayer dollars spent bailing out the financial industry.
A group of leading House Financial Services Committee GOP members issued statements Tuesday decrying the tax idea, saying it runs counter to the broader economic goal of increasing access to capital to spur economic recovery.
"There is no way the administration can design a tax on financial firms that will not be passed on to consumers and investors in the form of higher interest rates and increased fees," the Financial Services Committee's top Republican, Spencer Bachus, said in a press release. "The tax will only drain capital from the financial system at a time when it's needed to create jobs and fuel economic growth."
Reps. Jeb Hensarling, R-Texas, and Scott Garrett, R-N.J., voiced similar objections.
"It is premature to be talking about new taxes on the financial services industry," said Garrett, the lead Republican on Financial Services' capital markets subcommittee. "Every dollar levied in taxes would directly impact available dollars to lend."
The financial services industry remains wary that such a tax could gain traction on Capitol Hill.
"Politically it will have a lot of attractiveness," said Scott Talbott, a senior vice president for the Financial Services Roundtable.
He said the industry always knew a tax was possible but now is too soon. The 2008 statute establishing the Troubled Asset Relief Program specifically allowed for the Office of Management and Budget to propose a tax if costs were not recovered in five years, but Tarp is still in operation and taxing the industry now could set back the economic recovery, Talbott said.
"This levy is already contemplated by current law, however, it is premature. The recoupment provision is not triggered for another four years. … We don't know what the actual profit or loss from Tarp will be."
