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Sunday, January 17, 2010

Report: Wall St. Considers Constitutional Challenge to Responsibility Fee

by Calculated Risk on 1/17/2010 10:06:00 PM

From Eric Dash at the NY Times: Wall St. Weighs a Constitutional Challenge to a Proposed Tax

In an e-mail message sent last week to the heads of Wall Street legal departments, executives of the lobbying group, the Securities Industry and Financial Markets Association, wrote that a bank tax might be unconstitutional because it would unfairly single out and penalize big banks ... [and]has hired a top Supreme Court litigator to study a possible legal battle ...

Privately, executives at several large banks said they believed a legal battle was doomed to fail in Washington and risked escalating public rage over the bailouts of the banks.
The fee is imposed only on banks with "more than $50 billion in consolidated assets", and on the liabilities "excluding FDIC-assessed deposits and insurance policy reserves". It is hard to imagine that would be unconstitutional.