Comments on: The bank tax is just an increase in cost of funds http://blogs.reuters.com/felix-salmon/2010/01/14/the-bank-tax-is-just-an-increase-in-cost-of-funds/ 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: OnTheTimes http://blogs.reuters.com/felix-salmon/2010/01/14/the-bank-tax-is-just-an-increase-in-cost-of-funds/comment-page-1/#comment-11194 Sat, 16 Jan 2010 01:31:30 +0000 http://blogs.reuters.com/felix-salmon/2010/01/14/the-bank-tax-is-just-an-increase-in-cost-of-funds/#comment-11194 “Meanwhile, an anonymous “senior industry leader” from the murky depths of the financial-services industry emerges to inform Politico that lending could be hit to the tune of $1 trillion as a result of this fee. ”

If I was going to say something as ridiculous as this, I wouldn’t want my name associated with it, either.

But murky depths of the industry is right. Like the sewer.

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By: EconMike http://blogs.reuters.com/felix-salmon/2010/01/14/the-bank-tax-is-just-an-increase-in-cost-of-funds/comment-page-1/#comment-11149 Thu, 14 Jan 2010 22:37:33 +0000 http://blogs.reuters.com/felix-salmon/2010/01/14/the-bank-tax-is-just-an-increase-in-cost-of-funds/#comment-11149 Felix:
Very interesting set of posts today regarding the proposed bank tax, the interplay with TBTF incentive issues, and the benefits of the TBTF designation in terms of reduced borrowing costs. Given the demonstrable benefits to the TBTF banks of the federal support they enjoy, there would appear to be an opportunity here to use this tax not just to enrich the fisc, but to also promote other objectives such as reducing TBTF benefits and incentives for excessive leverage. It would be interesting to hear your thoughts as to what those objectives might be and how the proposed tax could be structured to achieve those ends. For example, can the tax be structured to provide us with a “two fer” in terms of policy objectives (revenue collection and reduction of TBTF benefits and incentives to become TBTF). Would an ecalating rate based on the amount of liabilities (excl deposits) promote this? Can the tax be structured to make it less likely to be passed onto borrowers? What would be the pros/cons of a “windfall profits” tax that disallowed bonus deductions above a certain level? Would one tie a windfall tax to the cost of capital differantial? There seem to be lots of interesting possibilities here to structure this proposed tax to achieve various policy objectives that are currenty in the public’s eye. It would be interesting to hear more from you on all of this.

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