The Senate Finance Committee's top Republican has challenged Treasury Secretary Timothy Geithner to recommend a Presidential veto of a proposed tax on big banks if Democrats use it for anything except recovering funds from the bank bailout. Tax writers have been considering a fee of 0.15% on the liabilities of financial institutions with more than $50 billion in assets. Observers see the Democrats eyeing the tax as a way to pay for other legislation.
During the Finance Committee's second hearing Tuesday, Geithner told Ranking Republican Charles Grassley, R-Iowa, both he and Obama feel very strongly that proceeds from the tax should go to reduce the deficit. Meanwhile, Senator Orrin Hatch, R-Utah, questioned why banks that have already repaid their TARP loans should pay a new tax. He says auto companies like General Motors Corp. and Chrysler LLC are responsible for much of the bailout program's outstanding debt.
Geithner admits that there's no perfectly fair approach, stressing that 99% of U.S. financial institutions would not be subject to the tax. He said the auto companies were a different case, since they did not cause the financial crisis and had gone through government-supervised bankruptcy.
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