Now, to fill the $117 billion costs of the TARP program, President Obama has called for the fee to be assessed against any financial services firm with more than $50 billion in assets and owns a thrift, including property/casualty insurers, with payments beginning on June 30 of this year. These companies will be required to pay the fee even if they have paid back their TARP loans, with interest, and even if they never received any federal money at all.
At NAMIC we believe this is an unfair policy that sends the wrong message to Wall St. and to the taxpayers. What does it say when simply meeting an arbitrary threshold means having to pay for the failures of companies that gambled with their customers’ money and lost?
Property/casualty insurers have remained financially stable throughout the financial crisis. Even at AIG, the insurance operations remained strong while its financial products division shattered the company. In the weeks after the crisis began, NAMIC’s board of directors resolved on behalf of our association and its members that we did not need or want TARP funds.
Why then, would those companies who have weathered the financial storm be asked to pay for those who couldn’t? Supporters of the fee have argued that by stabilizing the economy, the TARP helped those companies being asked to pay the fee. This is a flawed argument, though, because it assumes the benefits of a stabilized economy were limited to companies with more than $50 billion in assets. Certainly those supporters wouldn’t make that argument.
Given how much has been spent in the name of stabilizing and stimulating the economy, it’s vital that our elected leaders aggressively seek to recoup as much of the taxpayers’ money as possible. But those efforts should be, made fairly, with thought given to those who acted responsibly throughout. We at NAMIC have no dispute with a “Financial Crisis Responsibility Fee,” we just believe it should apply to those who bear the responsibility for the financial crisis.