J.P. Morgan to pay 1.92 bn, Citi 2.11 bn, BAC 1.98 bn, GS 1.18 bn per year in "fees"?

Discussion in 'Wall St. News' started by ASusilovic, Jan 17, 2010.

  1. SAN FRANCISCO (MarketWatch) -- President Barack Obama's proposal to levy at least $90 billion in fees on banks is riling the industry as analysts estimate which companies may be hit the hardest.

    One analyst called the fees "onerous," especially for firms focused on capital markets like Goldman Sachs Group Inc and Morgan Stanley. Another compared the plan to the policies of Venezuelan President Hugo Chavez.


    "In the tradition of Hugo Chavez, The Wall Street Journal indicates that the Obama administration wants to tax the rich and dishonest bankers to pay for the problems throughout the American economy -- notably, at the moment, the losses in the automobile industry," Richard Bove, an analyst at Rochdale Securities, wrote in a note Friday.

    He noted that the big U.S. automakers had finance units that became major competitors to banks during the credit boom of the previous decade. GMAC, the finance arm of GM, branched out beyond car loans to become a major player in the subprime-mortgage market, according to Bove.

    "Even though the auto companies might have been accused of being greater offenders in creating the financial crisis than the banks, the banks are labeled villains and must be taxed to pay the funds used to bail out their competitors," he wrote. "This is pure Chavez reasoning."

    Mike O'Rourke, chief market strategist at brokerage firm BTIG, said the government wants to charge TARP participants from whom it already has made profits to help recoup losses on other, more financially troubled TARP recipients.


    Chavez policies made in USA ? ROFL ! :D
  2. Why not? Chavez is a hero-worship character in Obama's philosophy... along with Marx, Mao, Castro, Saul Alinski.
  3. I don't agree with taxing the rich any more than I agree with bailing out the rich. However, if they are willing to be bailed out, they should be prepared to pay extra for it. Sure, many of these companies have repaid their bailout money and are now back to making profits and paying out large bonuses. But look what the effect has been on the US economy. The US stock market decline caused Americans to lose billions of dollars, which has caused many retail investors to stay out of the market and miss the subsequent stock market rise since last March. Foreclosures have reached epidemic levels. The US money supply has been increased over ten-fold leading to a devaluation of the dollars in everyone's bank account. Unemployment is still at very high levels. Our national debt is now literally unpayable.

    A tremendous financial hardship was placed on the American people and is still negatively impacting many of them as a result of the near financial collapse. I agree with taxing the bankers who made bad business decisions to contribute to this financial catastrophe until our economy is back in order. There is a very real risk that we could have a further worsening of our economy due to another wave of foreclosures and global economic problems. We are not out of the woods yet.
  4. patchie


    When Wall Street claims they paid back the TARP funds they are looking at it under very selective terms.

    TARP funds, in the hundreds of billions was used to stabilize the markets and the industry. it was intended to be used to increase credit to stabilize the economy. but that is not what it was used for. instead those that received TARP funds used it for investment to shore up their books without offering out to those responsible for offering it in.

    When you look at aid it comes in many forms and has many tentacles. One tentacle is loss avoidance. Without the bailout, GS would not have had record profits but in reality record losses. without AIG GS would have had no insurance on their risk and that exposure would have duplicated itself as the process snowballed. so the impact of Tarp was more than baseline to profit but has to look at the potential below baseline losses that Goldman would have suffered and that is also the cost of TARP that Goldman doesn't want anybody to consider in repayment. Too bad Blankfein doesn't respect that reality.
  5. I don't believe in governments running the private banks. This tax money will be wasted by the government anyway and will go down the drain and contribute nothing to the economy and improving the unemployment picture. Government socialism, what is it good for.
  6. They did repay the TARP money with billions of
    profit to the government. What did they use it for is irrelevant to the fact. Government got it's money back for it's loan.

  7. Agree. Pure populism.

    Banks will not pay anything, their customers will.
  8. patchie


    Besides the fact that the TARP funds was provided to increase lending and lending was not increased, GS never repaid and of the TARP they received from AIG did they? That was TARP money just washed once.
  9. GS did repay TARP. As for lending they won't lend until the general economy heals and conditions will be right. It takes time and it does not work on government directives.
  10. Bank Tax Is 'Expropriation Venezuela-Style': Bove
    Published: Tuesday, 19 Jan 2010 | 7:51 AM ET
    Text Size
    By: Antonia Oprita
    Associate Web Producer, CNBC.com

    Weakness in the consumer sector is something to look out for in banks' results and the tax that the government wants to impose on major banks is no less than expropriation, Richard Bove, bank analyst at Rochdale Securities, told CNBC Tuesday.

    "The real problem that banks are finding at the moment is that their consumer business is just not turning around. The only thing that looks good at the moment is auto loans," Bove told "Squawk Box."

    Banks will also be hit by paying back the funds they received from the government under the Troubled Asset Relief Program (TARP), he said.

    The tax on major banks that the government wants to introduce to recoup some of its TARP money forces banks to pay for the losses in the auto sector, which was also bailed out by the government, and at CIT and AIG, which are not banks, Bove pointed out.

    "If it does (become law), it's just pure expropriation Venezuelan-style," he said.

    The government is forcing the banks to pass on much higher costs to consumer, because banks will simply reduce lending sharply to free up the cash to pay the tax.

    Bove has a "sell" rating on Citigroup [C 3.42 --- UNCH (0) ].

    "As a result of repaying the TARP, they freed up the government to sell 7.7 billion shares of stock," he said.

    He rates Goldman Sachs [GS 165.21 --- UNCH (0) ] a "buy," partly because of the bank's expertise in advising on mergers and acquisitions, which will help it get even better earnings.

    "Money supply keeps growing, the cost of money is cheap, you're going to see a big increase this year in merger and acquisition," Bove said. "This year, 2010, is likely to be an all-time record year in Goldman's earnings."

    #10     Jan 19, 2010