Banks make $600 million in fees under Obama bond program

The banking industry has made roughly $600 million in fees for underwriting state and local bonds in an Obama administration program.

The Treasury Department estimated Friday that underwriters made $609 million in fees between April 2009 and March 10. Many underwriters are large Wall Street and regional banks that arrange new bond deals and find investors to purchase the bonds. The program has come under fire from some critics and Sen. Charles Grassley (R-Iowa) for benefiting Wall Street.

The Build America Bonds program was part of the $862 billion fiscal stimulus program passed early last year, and the administration credits it with making it easier for local authorities to raise money during the recession and financial crisis.

The Treasury Department said the average underwriting fee on the Build America Bonds has been "somewhat higher" than the average fee for more conventional tax-exempt bonds. But the administration said the difference has narrowed since the new bond program began in April 2009.

"Over time, BABs have become better known and less risky from the underwriter's perspective, which likely lowered underwriting fees," Treasury said in a report.

Grassley criticized the program several times in March.

"The large Wall Street investment banks love Build America Bonds -- they're getting richer off of them," Grassley said in speech on the Senate floor on March 16.