The Fickleness of Liberal Taxes: TARP, GM, Chrysler

The banks that repaid loans are taxed again!

There is a new tax coming to U.S. banks.  The populist rationale is: “They caused it, they pay for it.”  Too bad this view, which Democrats have pushed for over a year, is far from the truth:

Mr. Obama’s new “Financial Crisis Responsibility Fee”—please don’t call it a tax—is being sold as a way to cover expected losses in the Troubled Asset Relief Program. That sounds reasonable, except that the banks designated to pay the fee aren’t those responsible for the losses. With the exception of Citigroup, those banks have repaid their TARP money with interest.

The real TARP losers—General Motors, Chrysler and delinquent mortgage borrowers—are exempt from the new tax. Why the auto companies? An Administration official told the Journal that the banks caused the crisis that doomed the auto companies, which apparently were innocent bystanders to their own bankruptcy. The fact that the auto companies remain wards of Washington no doubt has nothing to do with their free tax pass.

Also exempt are Fannie Mae and Freddie Mac, which operate outside of TARP but also surely did more than any other company to cause the housing boom and bust. The key to understanding their free tax pass is that on Christmas Eve Treasury lifted the $400 billion cap on their potential taxpayer losses expressly so they can rewrite more underwater mortgages at a loss.

So companies that repaid their loans, with interest, are still going to be taxed, companies which have lost tens of billions of taxpayer dollars and have not repaid their loans are exempt, and the quasi-government/Democratic slush funders Fannie/Freddie can take as much taxpayer money as needed and operate outside of the TARP funds.

I’m sure banks will not pass along their increased government-mandated expenses to customers.

Your tax dollars at work!

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