Dodd doubtful that bank tax will a part of financial reform

Senate Banking Chairman Chris Dodd (D-Conn.) on Monday said he doubted that the bank tax being discussed by congressional tax writers would eventually be rolled into his financial reform bill. 

"There is merit to this idea, but it is not a part of my bill," he told reporters. 

Lobbyists have speculated that Republican resistance to the reserve fund Dodd included in his reform bill would be replaced by the bank tax. Sen. Richard Shelby (R-Ala.), the ranking member on Banking, opposes both the reserve and the bank tax and is a good indication for what conservative senators could support.  

"I think we need to knock that [reserve fund] out and I hope we will," he told reporters, adding that he "wouldn't replace it with taxing people." 

There is also a timing issue with adding a bank tax to the financial reform bill. The Senate could wrap up its work on financial reform as earlier as next week, according to Shelby. But the Senate Finance Committee is not expected to complete its work on the bank tax until Memorial Day. 

Senate Finance Chairman Max Baucus (D-Mont.) is slated to hold his first of three hearings on the bank tax tomorrow. 

In the House, Ways and Means Chairman Sandy Levin (D-Mich.) said his committee is just beginning to study the bank tax, meaning a bicameral consensus on the levy could be a long way off. 

"I think one way or another we are going to consider this issue as a financial fee or a tax on institutions that benefited from the [TARP]," he told an audience at the National Press Club. "There are various ways to go, asset versus income, for example. The administration has proposed one path and we have been in discussions intensely with the administration."