Others argue that the tax would remove capital from banks and further stifle lending to consumers and small businesses, ultimately hurting employment and business expansion.
“It’s very important that credit continue to flow so anything that takes away from that operation, I think is a handicap,” said Donald Powell, a former FDIC chairman and current board member at Bank of America .
Most lending in the United States, however, is currently government based, said Steyer:
“Everybody knows that the function within society that people want to support is the lending side,” he said. “So when the securities side screws up and costs us all a ton of money and we have to get bailed out, good god, you’re going to totally gut our lending operation. Well it’s exactly like a municipal government which overspends and as soon as somebody goes, well we don’t want you to raise our taxes, fine we’ll pull all the cops off the street. That’s exactly what they’re doing. They’re saying fine, lawlessness may reign.”
The President’s announcement comes at a time when some Wall Street banks are expecting record profits and are set to pay employees a record $145 billion dollars in bonuses.
“What people are angry about is guaranteed insured big paychecks,” said Steyer. “Big pay checks where I get them, but if I lose money, you pay for it.”