Financial Regulatory Forum

ANALYSIS – Obama attacks on banks fall flat but may persist

By Karey Wutkowski

WASHINGTON, Jan 20 (Reuters) – The Obama administration’s Wall Street bashing fell flat among voters in Massachusetts, but that doesn’t mean Democrats have ended their anti-bank rhetoric.

Major U.S. banks, which returned to sizable profits and lavish bonuses just months after taxpayers bailed out the financial system, represent a convenient target for politicians to score points with voters.

“It is too easy and ripe and necessary a target for the Obama White House because they’ve been labeled as protecting the banks … during the whole first year of their administration,” said Ethan Siegal, an analyst with the Washington Exchange, a private firms that tracks Congress and the White House for institutional investors.

In the past week, however, criticizing Wall Street fat cats has not translated into wins for Obama.

Massachusetts voters stripped the Democratic party of a crucial Senate seat on Tuesday, handing a surprise victory to Republican Scott Brown, a candidate Obama had painted as a friend of the banks.

Sweden proposes EU bank tax, gets cool response

By John O’Donnell

BRUSSELS, Jan 19 (Reuters) – Sweden’s finance minister called on European counterparts to follow U.S. President Barack Obama’s lead with a bank tax to recoup the cost of propping up the industry but the idea received a guarded response.

Obama proposed last week that Wall Street pay up to $117 billion via a special levy to reimburse taxpayers for the financial bailout, saying “fat cat” bankers were making massive profits and “obscene” bonuses.

“We cannot accept a situation where the bankers are running away from the bill,” Sweden’s Anders Borg said on Tuesday at a meeting of European Union finance ministers, outlining his ideas for a bank tax or levy based on that in the U.S. and Sweden.

UK’s Myners calls for global debate on bank levy

LONDON, Jan 18 (Reuters) – Britain’s financial services minister Paul Myners said on Monday he wanted to promote a global debate on how to protect taxpayers from future investment bank failures and warned banks against paying big bonuses.

Myners will host a meeting of representatives from the G7, the World Bank and the IMF in London on January 25 during which an American-style insurance levy on financial institutions will be discussed in an attempt to avoid costly bailouts in the event of another crisis.

“We want to promote a global debate about this,” he told BBC radio.

“Gordon Brown made a very good speech at the G20 finance ministers’ meeting in St Andrews in November which we then followed up in the Treasury with a publication of a document setting out a number of ways in which the implicit guarantee could be internalised by the banks through a transaction tax, or through some form of deposit levy.”

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