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The president announced his bank fee proposal, and Christine and Erik have done a great job setting forth the implications of it. It's a small fee, but it, by targeting the big banks, is a disincentive for bigness - that strikes me as a good, if modest thing. But does the president need Congress to pass his fee?

It appears that the fee will be sent to the legislature with the budget. But must it be? After all, as the fact sheet accompanying the announcement indicates,

The EESA statute that created the TARP requires that by 2013 the President put forward a plan “that recoups from the financial industry an amount equal to the shortfall in order to ensure that the Troubled Asset Relief Program does not add to the deficit or national debt.” The President has no intention of waiting that long. Instead, the President is fulfilling three years early his commitment to put forward a proposal that would – at a minimum – ensure that taxpayers are fully repaid for the support they provided.

I think the administration must indeed go to Congress to impose this fee, rather than relying on its TARP authority to impose it unilaterally. The power to tax lies in Congress's hands, and the TARP just requires the president to plan not to increase the deficit - it dos not empower the president to recoup lost funds (it is a handwaving gesture, more than a grant of power). And if the president did recoup lost funds, it would be difficult to prove that they had been lost by those banks that have paid back their TARP debts, with interest. Such recoupment could possibly justify imposing an annual charge on the liabilities of institutions that have not paid back their funds, which would be the automakers and AIG, basically. But they can't afford the tax, and again, I don't see how the administration could increase the surcharge on even these institutions beyond the amount borrowed. Here's a brief summary of a D.C. Circuit case that demonstrates how closely agencies must hew to congressional authorization when imposing fees. It is one of the last vestiges of the nondelegation doctrine, interestingly enough.

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The president announced his bank fee proposal, and Christine and Erik have done a great job setting forth the implications of it. It's a small fee, but it, by targeting the big banks, is a disincentive for bigness - that strikes me as a good, if modest thing. But does the president need Congress to pass his fee?

It appears that the fee will be sent to the legislature with the budget. But must it be? After all, as the fact sheet accompanying the announcement indicates,

The EESA statute that created the TARP requires that by 2013 the President put forward a plan “that recoups from the financial industry an amount equal to the shortfall in order to ensure that the Troubled Asset Relief Program does not add to the deficit or national debt.” The President has no intention of waiting that long. Instead, the President is fulfilling three years early his commitment to put forward a proposal that would – at a minimum – ensure that taxpayers are fully repaid for the support they provided.

I think the administration must indeed go to Congress to impose this fee, rather than relying on its TARP authority to impose it unilaterally. The power to tax lies in Congress's hands, and the TARP just requires the president to plan not to increase the deficit - it dos not empower the president to recoup lost funds (it is a handwaving gesture, more than a grant of power). And if the president did recoup lost funds, it would be difficult to prove that they had been lost by those banks that have paid back their TARP debts, with interest. Such recoupment could possibly justify imposing an annual charge on the liabilities of institutions that have not paid back their funds, which would be the automakers and AIG, basically. But they can't afford the tax, and again, I don't see how the administration could increase the surcharge on even these institutions beyond the amount borrowed. Here's a brief summary of a D.C. Circuit case that demonstrates how closely agencies must hew to congressional authorization when imposing fees. It is one of the last vestiges of the nondelegation doctrine, interestingly enough.

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