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Charlotte banks would have to pay 'crisis' fee

http://66.225.205.104/JR20100114a.mp3

Charlotte's two biggest banks, Wells Fargo and Bank of America, could be on the hook for a new federal fee President Obama is proposing to make up losses from the bank bailout program. WFAE's Julie Rose reports: Only the biggest of banks, insurance companies and brokers will have to pay the proposed fee - whether or not those institutions have paid back their TARP loans, or even took them at all. Many of those same institutions, including Bank of America and Wells Fargo, have since posted strong earnings and are expected to hand out large bonuses in the coming months. Wells Fargo calls the proposed fee "punitive." Bank of America would not comment. But Gene Sperling of the Treasury Department says it's the least the big banks can do. "It is not plausible that they can afford excessive - multibillion dollar bonus pools for their top executives but cannot afford to make whole the taxpayers that helped them survive," says Sperling. Sperling says the government expects to get back most of the $700 billion in TARP money it loaned out. About $100 billion of it will be lost for good, he says. The fee on big banks should recover that over the next 10 years. Smaller community banks won't have to pay it. And that inequity worries analyst David Kotok of Cumberland Advisors: "These are the same banks that are being told to raise capital, become more profitable, make more loans, tighten credit and be more regulated all at the same time," says Kotok. "Now we're going to tax them as well." The risk, says Kotok, is that big banks will pass the fee along to their customers or pull back on lending since the fee will be calculated according to a bank's debt. But Jim Cox, a professor of financial regulation at Duke Law School, thinks that may not be so bad, if it means customers go with a smaller bank that doesn't have to pay the federal fee "which is not too big to fail." "And that's probably the desirable social structure we'd like to have," says Cox. "Not a few big banks, but a lot of solid banks that are governable and manageable." Congress still has to approve the fee, and ongoing public outrage over big bonuses for bank executives may help persuade them. The White House is sending a not-so-subtle message in the name it's given to the proposal: The "Financial Crisis Responsibility Fee."