Comments on: How to get our money back from the banks http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: fred5407 http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/comment-page-1/#comment-11120 Thu, 14 Jan 2010 02:20:36 +0000 http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/#comment-11120 I think that these bankers are not alone. Lots of business people, including auto company executives drain the capital from their companies. Many times, and this includes bankers, do a poor job and still get the big bonuses. I do not know how to slow this greed down, but in the end nobody has a U Haul trailer attached to their coffin. If you have any sense of decency you cannot take a huge bonus when so many people are hurting and just trying to put food on the table.

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By: Schooner http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/comment-page-1/#comment-11078 Tue, 12 Jan 2010 20:38:33 +0000 http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/#comment-11078 Haven’t thought it out completely but why not just raise the equity levels of the banks.

If they were forced to reduce their leverage they would have to retain a chunk of those earnings to boost their balance sheets(much needed) and there would automatically be less to pay out.

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By: KenInIL http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/comment-page-1/#comment-11069 Tue, 12 Jan 2010 15:52:25 +0000 http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/#comment-11069 “Geithner, has been opposed, arguing that a transactions tax would simply be passed on to customers”

The transactions tax is a sin tax. Certain trading behaviors are perceived as socially detrimental (whether this is the case is a separate argument), and the tax is meant to discourage these behaviors.

And yes, the cost will be passed to consumers, as are all business taxes. But that’s an argument in favor of the tax, since it gives businesses an incentive to find ways to reduce their transaction costs and pass the savings to the customers, thereby capturing more market share.

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By: Lilguy http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/comment-page-1/#comment-11057 Tue, 12 Jan 2010 01:39:47 +0000 http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/#comment-11057 I’m with Epicurean on this. The LAST place this is going to hurt is the wallets of the banksters. It will hit shareholders and bank clients in higher fees, etc.

The only good part of it is that the taxpayers may get their money back–and more.

I think it will have to be the large institutional investors who own significant shares in these banks to vote, “enough is enough.” And if they won’t, none of the rest of us, together or separately, have the clout to constrain WS greed.

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By: rogueecon http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/comment-page-1/#comment-11053 Tue, 12 Jan 2010 00:23:28 +0000 http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/#comment-11053 I say tax the banks. This way, we make them have a stake in lowering bank pay. They cannot forever pass the cost of the tax onto consumers. people always have the option of moving to another bank.

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By: OnTheTimes http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/comment-page-1/#comment-11051 Mon, 11 Jan 2010 23:12:36 +0000 http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/#comment-11051 How about making the interest rate the Fed charges dependent on the percentage of debt that the loan represents relative to its size? Banks that borrow more than their share from the Fed (mainly to prop up their balance sheets) would pay a higher cost for this capital, and should make them less competitive with banks that don’t rely on the Fed as much.

Banks like Citi and BofA, which are very dependent on cash from the Fed, would pay a higher interest rate than other banks, and should reduce their profits without making them more susceptible to collapse. The lower the profits, the lower the bonus (at least in theory). The interest rate modifier could be viewed as a fee for the Fed assuming more risk, and would provide incentive for banks to become less dependent on it. This would also reduce the number of risky loans made, as the higher cost of capital for banks makes them less attractive.

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By: PopEconomics http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/comment-page-1/#comment-11047 Mon, 11 Jan 2010 22:38:12 +0000 http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/#comment-11047 RE: the supertax. And would it be bad if the supertax hurt shareholders? It seems that business-owners should ultimately bear the burden of a tax. And they, in turn, could punish their employees by paying smaller bonuses.

Of course, I know that doesn’t work in practice. There aren’t enough mad-as-hell shareholders organizing board ousters.

Here’s an idea, what about a tax on the revenues (not profits) of a bank? Make them pay whatever penalty you’d like before they can dole it out to employees.

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By: EpicureanDeal http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/comment-page-1/#comment-11046 Mon, 11 Jan 2010 22:21:30 +0000 http://blogs.reuters.com/felix-salmon/2010/01/11/how-to-get-our-money-back-from-the-banks/#comment-11046 But note that the UK tax was explicitly and implicitly designed to encourage banks operating there to not pay their employees but rather book those unpaid monies as retained equity in order to strengthen the banks’ balance sheets. Sure, the UK taxpayer will get some of its money back, but at the expense of weakened risk capital positions at its major banks. The nightmare scenario, of course, is that the UK government might have to use those extra tax proceeds (plus others, no doubt) to bail out failing banks a second time.

There is a third party you need to keep track of, too: outside bank shareholders. I pointed out in a comment on Simon’s post that to truly recapture the taxpayers’ subsidy from banks, you should tax the firm before compensation, thereby hitting the employees and shareholders together. It makes no sense to me that shareholders should get a free pass and benefit from the public’s largesse, either.

In any event, one can see the dilemma. Three parties are involved in a zero sum game: bank employees, bank shareholders, and the government. Somebody or everybody is going to get hurt. The question is who (and how). The UK’s example shows that it is not patently obvious policymakers can figure this out beforehand.

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