Banks Take a Battering

This has been one of those weeks that might make you glad you're not a banker, or wish you weren't if you are.

At Davos, French president Nicolas Sarkozy has re-ignited his campaign for a global tax on bank transactions and took time out to deliver a severe tongue-lashing to JPMorgan Chase CEO Jamie Dimon, who's not too enthused about Sarkozy's proposal, for some reason.

Sarkozy put the blame for the global economic downturn squarely on U.S. banks. "The world has paid with tens of millions of unemployed, who were in no way to blame and who paid for everything," Sarkozy said to Dimon, according to a Reuters report. "It caused a lot of anger."

"The world was stupefied to see one of five biggest U.S. banks collapse like a house of cards," Sarkozy added in a plenary session. "We saw that for the last 10 years, major institutions in which we thought we could trust had done things which had nothing to do with simple common sense."

"Bonuses don't bother me, provided there are also ... draw-downs when there are losses. When things don't work, you can never find anyone responsible. Those who got bumper bonuses for seven years should have made losses in 2008 when things collapsed."

You can't help almost feeling sorry for Dimon, who's been complaining all week (with some justification) about scapegoating of the banks by the media. But it's hard for the media to resist stories like the evidence unveiled this week in a lawsuit against Dimon's organization and its 2008 acquisition, Bear Stearns. According to a story in the Atlantic, Bear Stearns traders told their bosses that they were selling investments that they regarded as “a sack of shit."

Here's some other fun tax-related stuff that came big banking's way this week:

• The IRS amped up its campaign against banks it believes are implicated in tax evasion. Prosecutors alleged that employees of a major international bank (believed to be U.K.-based HSBC) helped a New Jersey businessman hide money offshore, according to Bloomberg.

• In a report that must have been music to Nicolas Sarkozy's ears, the left-leaning Center for Economic and Policy Research called for a “financial speculation tax” (FST) that it claims would “help rein in the economic rents earned by the financial sector by taxing the turnover of credit-default swaps, options, stocks, and other financial instruments.” An FST in the United States could bring in $150 billion per year, the report states.

• Ireland's on-again, off-again “supertax” on bankers' bonuses came a step closer to reality as lawmakers wrangled with a financial crisis that, according to one leader, makes Greece “look like a haven of political stability” (report from the Guardian). The tax, which would apply only to Irish banks that have received government support, would relieve bankers of 90 percent of any bonus payments. ###

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