Obama administration seeks tax hike on financial firms to recoup cost of bailout

By Binyamin Appelbaum
Washington Post Staff Writer
Thursday, January 14, 2010;

President Obama plans Thursday to propose a sharp increase in the taxes paid by the nation's largest financial institutions designed to raise $90 billion over the next decade while constraining the industry's ability to take large risks and reap outsize rewards, a senior administration official said.

The tax proposal, which would require congressional approval, is meant to make a splash, demonstrating to the public that the administration is now focused on reforming the financial industry after more than a year of bailout efforts. The official, who spoke with reporters before the president's announcement on condition of anonymity, said that large firms were reaping renewed profit from a rescue intended to help the broader economy and that the public deserved a larger share of the money.

The nation's largest banks are expected to report large annual profits over the next week, along with plans to set aside billions of dollars for employee bonuses.

"When you try to value the degree of benefit that they received from this exceptional government assistance, which was not aimed at helping specific companies but aimed at helping the economy at large, this is essentially the least they could do," the official said.

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