WALL STREET reacted with disbelief and resignation to the Obama administration’s plans to impose a levy on the industry to pay for the financial bailout.
With executives such as Goldman Sachs’s Lloyd Blankfein and JPMorgan Chase’s Jamie Dimon due in Washington today to testify before a congressional commission into the crisis amid a storm over bonuses, senior bankers said they felt under siege.
Bank shares reflected that bleak mood, with the stocks of many large lenders down by more than the overall market in New York.
“I cannot believe they are going after the banks that repaid the government in full and with interest. It’s pure political theatre,” an executive said yesterday, arguing that government officials had ruled out slapping the levy on companies such as the insurer AIG and the financial group GMAC that were still in hock to the authorities.
Colleagues and rivals echoed his views, pointing out that banks such as Goldman, JPMorgan, Morgan Stanley and Bank of America had long since returned the billions of dollars in taxpayers’ funds they received.
Yet, it is those large banks that are likely to have to bear the brunt of any levy imposed on the industry, especially if the administration decides to link the fee to the size of a lender’s balance sheet.
Some analysts have estimated that large deposit-taking banks might have to pay $20 billion each. – (Copyright The Financial Times Limited 2010)
