White House Proposes New Bank Fees, Bankers Yawn

While yesterday's front page financial market headlines warned of the escalating furor over bank bonus payments, today's news hits back with the administration's threat to impose new banking fees. The intention of the administration is to punish the banks for their evil misdeeds in causing the crisis, and to make average Americans feel better about the fact that they are unemployed while many in the financial sector expect to take home multi-million bonus packages and are somehow still complaining because it won't come in an all-cash payout.

Somehow, someway, those greedy bankers are going to learn their lesson, right? I mean, if you hit them up with a really harsh penalty filled with bracing specifics, they are bound to wise up and become far more contrite. According to the WSJ, "The administration is wrestling with who should pay, when it should be implemented and what would happen if banks pay more than the government-bailout program ultimately loses...Even though the proposal is still under discussion, it is expected to be included in the White House's budget, due next month, if only conceptually." Sounds terrifying. The administration has no idea what it is going to do, but it's going to do something, something really big. So big that it needs to be leaked to the press, put on the front page, and then included in the budget as a revenue item to help with the deficit.

I suspect that this fee, much like the financial regulation, and bonus restrictions, will be watered down until it too becomes completely meaningless. The problem is that once we bailed out the financial institutions, we crossed a line from which there is no return. No amount of fees, restrictions or regulations are going to make a difference in how these institutions operate now. It's just too late. The opportunity to extract concessions passed us by when our leaders at the Fed and Treasury had the banks by the balls in the fall of 2008, and chose instead to throw unrestricted gobs of money at them. Oh there is one former Wall Street high flyer that is contrite and demoralized and would've agreed to any concessions in September 2008. No bonus for five years? No problem. Pay the government 50% of all of our profits for the next ten years? Sure. Anything, I'll do anything, just don't let my company fail. He goes by the name of Dick Fuld.