White House Vows Not To Water Down Volcker Rule, As European Commission Is About To Endorse Tobin Tax
Just headlines for now. Headlines will turn to headaches for Goldman longs shortly. And what will really set off the migraine is the just released announcement that the European Commission will back a Tobin Tax on financial institutions. We are fairly confident that this would not be proposed without at least a preliminary nod from their counteparts across the Atlantic. We believe that the slow but certain conversion of the banking sector into a utility industry is now reality. And yes, bonuses in utilities max out at 25% of the base, not 2,500%.
Reports Dow Jones:
European Commission policymakers will endorse the idea of a "Tobin tax" on financial transactions to help European governments boost revenue, in a report due out next week." New tax bases, e.g., financial transactions, should be explored, in a coordinated way, as potential sources of government revenues," says the commission's "2020" outlook. AFP was able to see a copy of the report to be released March 3.
The idea of taxing the financial industry, in the wake of the economic crisis, still divide European Union leaders. Efforts to coordinate such a tax on a pan-European basis would face huge obstacles as taxation is a reserved power at the national level.
The new European Commissioner for financial services, Michel Barnier, has endorsed the idea. Barnier said in a recent AFP interview that such contributions from banks, insurers and markets could be used to lessen the budgetary load on states weighed down with post-crisis deficits and debts. The taxes could also provide funding for challenges such as climate change or food security.
U.K. Chancellor Alistair Darling, whom Barnier will visit in the City of London next month, has said that E.U. finance ministers had a "constructive discussion" on proposals by Sweden for "a levy on systemically important financial institutions," which will be debated in Madrid in April.
Time to short the XLF
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