I wish I could figure out what the Obama administration has in mind regarding that idea for a tax on the big banks. Whose idea was it? Did it come from Summers and Geithner? (Maybe, but I don't think so.) How about Rahm and the political team? (A lot more likely.) Somebody else? (I hope so!)
You see, it's actually a pretty good idea — provided it's done right. There is that little problem that it would have to be enacted by Congress, which means that getting it done right is very unlikely. Nevertheless, unable to rid myself of a residual twinge of optimism left over from my youth, I can't help thinking of how it might be done right.
Here's how it might happen: noticing how unhappy most of America is with the giant banks, their bailout by government, their vast, government subsidized profits for the past year, and the huge bonuses they are paying to their inept executives, members of Congress who are not total prostitutes to Wall Street will decide it might be a good idea to go a bit populist. They will go along with the Obama administration's efforts to assuage teabaggers and fellow travelers who think a balanced budget will restrain their taxes.
Community banks certainly cannot afford additional taxes — enough of them already are failing because they financed all those half-empty strip malls. Community banks will be excluded from the new taxes. The targets will be the big banks — the ones that are too big to fail.
If you slap a big tax on the biggest banks, it's a dead cinch that those big banks will break themselves into manageable pieces — pieces that are small enough to fail (and not pay those taxes.) Congress won't do it, but an appropriate tax will encourage the banks to do it to themselves.
Will it happen?
I'm not too optimistic, but, what the fuck, there's a chance.
Still, I'm not holding my breath.