Banks are evil, says the government, and banks must be punished for making money. That’s the story I see from a news report from the website of the British Guardian newspaper:
Tough proposals to cut the world’s biggest banks down to size by taxing their profits and pay were outlined by the International Monetary Fund tonight in an attempt to spare taxpayers another massive public bailout of the financial sector.
In measures more stringent than Wall Street and the City had expected, the fund called for the introduction of a twin-track approach to the three-year banking crisis that would both force firms to pay for any future support packages and raise new taxes on their profits and remuneration.
The report, prepared by the Washington-based institution for the G20 group of developed and developing nations, was seized upon by Gordon Brown as evidence that his push for an international crackdown on the banking sector was gaining support.
Leaked in advance of the fund’s meeting this weekend, the blueprint emerged as the investment bank Goldman Sachs released better than expected first quarter revenues and admitted its bonus and pay pool had reached $5.5bn (£3.3bn) in the first three months of 2010.
How dare banks make a profit in these times? Don’t banks realize that they are the root of all evil? Snarl! Gnash! Foam!
Sorry. I was channeling Karl Marx or maybe an Obama bureaucrat. It’s so hard to tell the difference these days. The bottom line is a multi-government attack on banks and other financial institutions as evil will only continue, and the call for a government solution (read that as more taxes) will echo in our capitol as well as around the world.
Don’t forget that our current financial problem came from the collapse of the housing industry, and that came because of government meddling in the free market. Since government intruded and distorted the normal market forces, it’s no wonder that government is now calling for more meddling in the form of additional taxes. Nobody loves a crisis as much as the government does. Or as President Obama’s White House Chief of Staff, Rahm Emanuel put it, “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things you think you could not do before.” And what could be more tailor-made than a fiscal crisis created by the same liberals who now want to “fix” the problem through taxes?
The anticipated study called for a financial stability contribution (FSC), which should be paid by all financial institutions, not just banks, and used to bail out weak and failing firms. It would initially be paid at a flat rate but eventually be tailored to suit institutions’ size and riskiness.
While banks had been braced for the FSC plan, they were caught unawares by the proposal for a financial activities tax (FAT), which would be based on the profits and the pay structure of the firms.
That’s right, tax them to pay for the bailing out the government did to shore up the institutions that were undermined by that self-same government. After all, evil and greedy bankers shouldn’t be making a profit anyway. Don’t they realize that all profits are evil and wrong?
Unless that’s profit made by the government through taxes. That’s a good thing. Well, good for government, at least.