Street’s investment banking giants face a fresh headache in the run-up to bonus season as the US government considers a special levy.
The Obama administration was last night planning an unexpected fee for top institutions in an effort to recoup more of the taxpayer funds pumped into the industry. Goldman Sachs, JPMorgan, Morgan Stanley and Bank of America are among those in the White House’s sights.
A charge would mirror Chancellor Alistair Darling’s attempt to rein in the financial big beasts as they prepare to pay out an estimated £40bn in rewards. The plan is said to be at an early stage and no decisions have yet been taken. It is likely to form part of next month’s budget, but it is not known whether a levy would need Congressional approval.
The proposal highlights politicians’ fears that a bonus bonanza over the coming fortnight could spark public outrage. It follows news that Andy Cuomo, New York Attorney General, has written to the eight firms bailed out in the Tarp?scheme in 2008 demanding details of their 2009 compensation packages. Cuomo said bonuses should not be based on “short-term fictional profits”.