The Corner

The Bank Tax

If we are going to allow some financial institutions to enjoy a government promise to back them up in emergencies — a call option on aid — then some sort of tax has to be levied on someone to pay for this bailout policy. The best way to handle this would be to raise capital standards for these “too big to fail institutions” and/or require compensation policies that help align the costs and benefits of risk-taking. This way, the tax would be paid by the institutions/individuals that are creating the risk of a future bailout.

Of course, the government should draw a bright line to signify which institutions are potential recipients of aid. Also, these institutions should have the chance to opt out — by becoming “not too big to fail,” for example, by reducing leverage or clarifying who owns what in case of bankruptcy.

One problem with the Obama administration’s proposal is that it is retrospective in nature, aligning the size of the tax with past costs rather than potential future costs. Another problem is that it appears the levy will be placed on firms without sufficient discrimination based on different kinds of risk.

– Robert Stein is a senior economist at First Trust Advisors.

Robert Stein is an economist for an asset-management firm and a former deputy assistant Treasury secretary for macroeconomic analysis.

Most Popular

Sports

Madden 21’s Creepy Colin Kaepernick Coercion

Madden NFL 21, this year’s iteration of the only major football video game in the world, has an average Google user rating of 1.4 out of 5. On Metacritic, it’s .2 out of 10. At CGMagazine, Brock McLaughlin writes that “This game is much like 2020, a giant disaster” and urged those interested to buy it if ... Read More
Sports

Madden 21’s Creepy Colin Kaepernick Coercion

Madden NFL 21, this year’s iteration of the only major football video game in the world, has an average Google user rating of 1.4 out of 5. On Metacritic, it’s .2 out of 10. At CGMagazine, Brock McLaughlin writes that “This game is much like 2020, a giant disaster” and urged those interested to buy it if ... Read More
Politics & Policy

Pennsylvania Poll: Biden 49, Trump 44

In the final Pennsylvania poll of the 2020 presidential election conducted by Muhlenberg College on behalf of the newspaper Morning Call, Joe Biden leads Donald Trump 49 percent to 44 percent. The same pollster's previous survey, conducted between October 13 and October 20, showed Biden leading Trump 51 percent ... Read More
Politics & Policy

Pennsylvania Poll: Biden 49, Trump 44

In the final Pennsylvania poll of the 2020 presidential election conducted by Muhlenberg College on behalf of the newspaper Morning Call, Joe Biden leads Donald Trump 49 percent to 44 percent. The same pollster's previous survey, conducted between October 13 and October 20, showed Biden leading Trump 51 percent ... Read More
White House

Hell, Yes

Editor’s Note: If you would like to read more pros and cons on voting for President Trump, further essays on the subject, each from a different perspective, can be found here, here, here, here, and here. These articles, and the one below, reflect the views of the individual authors, not of the National ... Read More
White House

Hell, Yes

Editor’s Note: If you would like to read more pros and cons on voting for President Trump, further essays on the subject, each from a different perspective, can be found here, here, here, here, and here. These articles, and the one below, reflect the views of the individual authors, not of the National ... Read More

Another Pollster Sees a Trump Win

The Trafalgar Group’s Robert Cahaly is an outlier among pollsters in that he thinks President Trump will carry Michigan, Pennsylvania, or both, and hence be reelected with roughly 280 electoral votes. (I explained his thinking here.) Last week another pollster, Jim Lee of Susquehanna Polling and Research, ... Read More

Another Pollster Sees a Trump Win

The Trafalgar Group’s Robert Cahaly is an outlier among pollsters in that he thinks President Trump will carry Michigan, Pennsylvania, or both, and hence be reelected with roughly 280 electoral votes. (I explained his thinking here.) Last week another pollster, Jim Lee of Susquehanna Polling and Research, ... Read More