WSJ: Populist Anger Is Fueling Bid to Charge Banks .
By GREG HITT and JONATHAN WEISMAN
The grassroots fervor that drove lawmakers to attack Wall Street bonuses last year has receded. But populist ire at Wall Street continues to simmer, and the proposed fee on banks being pushed by the Obama administration could get a favorable reception in Congress as the 2010 campaign year unfolds.
Maryland Rep. Chris Van Hollen, a member of the Democratic leadership team in the House, said he expected the proposed fee would "have strong resonance" on Capitol Hill.
"There is still a lot of anger and still a lot of frustration," he said of the mood among rank-and-file lawmakers. Mr. Van Hollen, who heads the Democratic Congressional Campaign Committee, the campaign arm of House Democrats, added that much of the "political turbulence around the country" could be traced back to anger at the $700 billion financial- and auto-industry bailout. "This issue is going to be very much with us throughout the year," he said.
Although details are still under discussion, administration officials hope to include a bank fee in the budget to be released next month as a way to offset taxpayer costs associated with the bailout, while also putting a small dent in the huge budget deficit.
Republicans could find themselves taking up the opposing argument on behalf of banks too tarnished to make the case. Rep. Jeb Hensarling (R., Texas) said banks shouldn't be penalized for making a profit, especially if they have repaid money loaned to them under the rescue plan.
"I don't want them to be on the taxpayer dole," he said. "The administration has this view ... let's punish those who make money."
Since the financial crisis erupted in late 2008, Congress and the White House have wrestled with how hard a line to take on executive compensation. Lawmakers imposed limits on bonuses for financial-services executives at companies receiving taxpayer assistance, and the Treasury appointed a pay czar who set precise limits for top earners at those companies.
At the same time, a proposed tax on Wall Street bonuses never became law. Neither did a proposed tax on financial transactions, such as derivatives trades, that has been pushed by some Democrats and labor officials.
But the proposed bank fee could be hard to stop. Concept Capital analyst Jaret Seiberg said the congressional elections looming in November could encourage Democrats to push the issue strongly.
Sizable year-end bonuses from large banks due this month are likely to provide more impetus for lawmakers to enact some sort of surcharge, Mr. Seiberg added. If public fury mounts, "We could see a Wall Street surtax move from more of a PR issue to a true policy priority," Mr. Seiberg said.
Rep. Xavier Becerra (D., Calif.) predicted "we'll continue to see scrutiny over the industry" in 2010. Mr. Becerra, vice chairman of the House Democratic Caucus, suggested he would be open to a bank fee as a way to "make sure we have some mechanism in place" that would ensure taxpayers don't lose money on the rescue.
Write to Greg Hitt at greg.hitt@wsj.com and Jonathan Weisman at jonathan.weisman@wsj.com
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