Obama’s new bank tax: Is it even enough to cover the social losses?

Motivated by growing clamor to have major U.S. banks answer for their extravagant bonuses to their top executives despite the American public reeling on a 10% unemployment rate, the White House is set to announce a tax policy targeting the banks  which is seen to collect around $90 billion over a span of 10 years.

The amount is expected to cover the losses from the government’s $700 billion TARP, which analysts already believe have gone beyond $100 million.  Latest surge in the financial markets have given banks a huge boost in their profits which led to some of them to fully repay government the money they owe. This enabled the huge payouts for top Wall Street executives prompting harsh criticism from many fronts.

These financial institutions have forgotten that the same excesses were responsible for America’s worst economic meltdown since the Great Depression that left many Americans homeless and unemployed. This new taxation, which Obama will likely have no problem in getting approved in a Democrat-controlled Congress, might cover part of the money lost during the bailout but in no means will bring back the homes of millions of Americans virtually making many suburban areas across the States like ghost towns.

Main Street still losing the fight versus Wall Street

A year after the global financial meltdown began in Wall street, the tide has yet to turn in favor of the American public who suffered mostly because of the excesses of the behemoth banks. As shown on Al Jazeera’s documentary program “People and Power,” America’s Main Street still has a huge hurdle confronting them before a just and lasting solution toward recovery is realized.

When President Barack Obama was elected to office last year and promised change to be implemented in the financial system which would be pro-consumer, many thought the “evils” of Wall Street will finally be subdued. Unfortunately, for many Americans who has already lost their homes due to foreclosures, this effort by the current administration has hit a snag.

Financial institutions practically begged Congress last year to bail them out from their troubles which they themselves induced. Washington obliged through the TARP program thinking the move would allow banks to modify mortgages of their consumers, mortgages that forced out many ordinary American families out of their homes.

Wall Street, however, did not do their part of the bargain but instead is steadfastly lobbying in Congress to firewall any attempts of American consumers to protect themselves from similar scenarios. Others believe so powerful they are that they managed to convince U.S. senators to confirm Federal Reserve chairman Ben Bernanke for a second term in office. Vermont independent senator Bernie Sanders, who vehemently opposed Chairman Bernanke’s nomination, was even quoted in the press saying Bernanke was Wall’s Street’s guy.

Time Person of the Year not going to bail Bernanke, Fed out

I watched Republican senator and last year’s U.S. presidential election aspirant Ron Paul two nights back on CNBC Squawk Box castigating the Federal Reserve for their seemingly mishandling of the financial crisis. For him the institution has become outdated and irrelevant in this modern age of complex financial products. I thought he was just in his usual maverick mood as the panel were pretending to be interested in his theories when in fact they were aching for the queue to call for a commercial.

Little that I know, since I have spent less time watching the news lately because I have a lot on my plate at work, that there has been a clamor in the U.S. Congress to curb the powers of the Federal Reserve amidst questions of their handling of taxpayer’s money to bail out Wall Street  in the height of last year’s financial collapse.

This comes as as Fed chairman Ben Bernake was hailed by Time Magazine as Person of the Year for 2009 for his role in bringing the United States economy out of recession. Expectedly, this has been met with criticism just as how people questioned President Barack Obama’s winning of the Nobel Peace prize last week.

Although Bernanke is set to be nominated anew as chairman of the central bank, he will probably be ushering a new age for the institution where it will no longer enjoy the autonomy it used to have after it was acknowledged for its failure to stop the American economy’s descent  to its worst financial crisis since the Great Depression.