Banks say that the president's potential banking fees could cost the economy up to $1 trillion. Banks may fight Obama fee

Banks are considering an aggressive lobbying campaign to try to defeat President Barack Obama’s new bank fee, arguing that it could cost the economy as much as $1 trillion in lost lending.

"The money to be collected is capital being pulled out of the banking system that could support ten times the amount in new lending," a senior industry leader told POLITICO. "That's because $1 in capital supports $10 or more in lending. So the tax will pull not $90 billion in lending capacity out of the banking system, but $1 trillion in potential lending.”


The industry official continued: “The Administration is choosing, it seems, to score political points at a time when millions of American businesses, families, and unemployed workers continue to struggle. Shutting off a trillion dollars in private lending capacity isn't, in our view, the way to stimulate the economy.”

The White House, anxious to show its populist chops at a time when banks are unpopular, can be expected to welcome the combat.

White House senior adviser Valerie Jarrett said on MSNBC's "Morning Joe” that the fee, which Obama is calling a Financial Crisis Responsibility Fee, would primarily hit 30 or 40 big firms that “were principally responsible for taking the risk that created this crisis in the first place.”

“[The banks should] step up to their responsibility and be our partners, and not try to fight their obligations. Everyday Americans have to pay their obligations. Why shouldn't the banks?” Jarrett said. “We're not looking to pick a fight. We're just saying: Make the taxpayers whole."

Explaining the politics of the proposal, a senior administration official senior administration official said it “gives Dems a rallying point and puts Republicans in a box.”

“While the GOP has muddied the waters on financial reform, the Wall Street fee is a bright line: either you are on the side of making taxpayers whole or you want to protect outsized profits at the big Wall Street banks,” the official said. “If the GOP lines up with Goldman and company on the fee, it'll make it easier for Dems to demonstrate that they are protecting the ‘fat cats’ and opposing real change to Wall Street.”