Obama Plans Bank Tax On AIG (NYSE: AIG), Bank Of America (NYSE: BAC), Citigroup (NYSE: C) And Other Big Banks To Recoup TARP Losses

President Obama is planning to announce Thursday a bank tax on 50 of the nation’s largest financial institutions in order to recoup losses from the bank bailout.  The tax would be applicable to any institution with more than $50 billion in assets and would kick in on June 30.

News of the possible tax broke after a senior official involved with the plan briefed reporters late Wednesday.  Though no specific firms besides AIG (NYSE: AIG) were named, based on the criteria, Bank of America (NYSE: BAC), Citigroup (NYSE: C), Goldman Sachs (NYSE: GS) and JP Morgan Chase (NYSE: JPM) would be included in those to be taxed.

According to recent reports, the tax would last roughly 10 years and aim to collect $90 billion.  The Obama administration plans to call the tax the “financial crisis responsibility fee.” 

“The goal of this proposal is to ensure that those major financial institutions who were the most significant contributors to the financial crisis, and who have been the most significant beneficiaries of the extraordinary public policy efforts, take responsibility to ensure that all of the costs of TARP are not added to the deficit or passed on to next generations through an increase in our national debt,” said the official, according to a New York Times report, who spoke on condition of anonymity in advance of the president’s announcement.

Obama plans to propose the tax to Congress as part of the budget being sent to them in early February.  The tax would have to be approved in a vote by lawmakers before taking effect.  If implemented, the tax would be collected by the Internal Revenue Service (IRS).

As part of the TARP created during the Bush Administration, the President is required by law to seek recovery of program losses by 2013.

Lawmakers estimate that losses from TARP will be roughly $117 billion, which is drastically lower than original estimates that were north of $300 billion.