Banks Brace for Bailout Fee

Here we go again… Today and the Wall Street Journal are reporting that the White House and Congressional leaders are considering to hit the banks with a fee due to the losses incurred by the government when bailing out the “too big to fail” financial firms.

If you read our past blogs and eNewsletters, we have been saying for some time that the banking industry still has grave concerns ahead of it.  What is amazing, and what confirms that many politicians do not understand economics or business, is the fact that the administration is trying to structure the fee so that it can’t be passed along to bank customers.  You got it.  Those are the same customers whose tax dollars were used in the first place to bailout the financial service industry.

It is a fact that the more you tax or increase fees, the less capital companies have to grow and the less money consumers have to save or spend in this economy.  Businesses and consumers will always react to these government increases.  Case in point, the banks are already passing costs of new legislation onto their customers in regards to such areas as draft fees and credit cards.

Watch closely as these decisions being made will have a huge impact on our economy this year.  You can only print so much money, bailout so many groups, and increase taxes before the markets, economy and consumers respond in negative ways.

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