February 14, 2012

Big Bank Lobby Threatens To ‘Employ The Grassroots’ If Bank Tax Gains Any Traction In Congress

Big Bank Lobby Threatens To 'Employ The Grassroots' If Bank Tax Gains Any Traction In Congress
The American Bankers Association is openly threatening to mobilize an astroturf movement against a bank tax.

President Obama unveiled his Fiscal Year 2013 budget proposal this week. While it is not expected to be passed into law, it is being used as a statement of Obama’s fiscal and political principles going into the election year.

Included in Obama’s proposal this year is a special tax on financial firms with more than $50 billion in assets. This bank tax would raise an estimated $61 billion in revenue if enacted. To many Americans, taxing these big banks is only fair. After all, their reckless behavior helped cause a recession that impoverished more than 60 million people and destroyed $50 trillion worth of global wealth. Of course, these same big banks then went on to be saved by the taxpayer to the tune of billions of dollars from the Trouble Asset Relief Program (TARP) and trillions of dollars from the Federal Reserve. In many respects, a bank tax would simply involve the banks paying the American people back.

Yet the Big Banks don’t expect the tax to gain any traction. American Bankers Association executive vice president James Ballentine downplayed the tax and even threatened to mobilize Americans in an astroturf movement against it if it gains any traction:

Making a return appearance to the budget this year is a $61 billion tax on the largest financial institutions to offset the costs of the bank bailouts and Obama’s mortgage refinancing program. The so-called “bank tax” has made an appearance in the president’s last three budgets, said American Bankers Association executive vice president James Ballentine.

“It’s been a nonstarter the last couple years. I don’t expect there to be any movement by Congress to bring this up. If there is, we’ll
employ grassroots as necessary and go from there. We can only go on the history of how it’s been received and it’s not been received well,” he said. “If we get some sense of movement, we will act accordingly. We don’t plan to do anything aggressive at this point.

Given the fact that there is not a citizens movement championing the big banks’ legislative agenda, Ballentine likely is referring to creating an astoturf movement — that is, a fake grassroots movement.. In the past, big banks worked with organizations like the Chamber of Commerce to conduct public outreach and other activities designed to make it seem as if there is strong public sentiment on the side of the banks.
The bank lobby’s power in Congress has been ferocious. When Sen. Jim Webb (D-VA) proposed taxing some of Wall Street’s windfall profits following the taxpayer bailout of financial firm, he couldn’t even get a vote on his proposal. “I got so much froth from Democrats saying that any vote like that was going to screw up fundraising,” he explained to Real Clear Politics.