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Obama's bank tax is a big idea that might actually get done

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An idea that team Obama said would be in the State of the Union over the weekend, but then didn't really make it into the text was the idea of a new tax on borrowing by large banks. It's too bad that he didn't talk about it more explicitly because there's something big that makes this tax idea different from his administration's other tax ideas is that it could actually happen.

What Obama proposed was a 0.07 percent tax on borrowing by America's largest banks. The way this works is that banks with over $50 billion in assets (which is about 100 banks) would need to pay a 7 cent tax to the federal government on every $100 that they borrow.

That has two goals — raising revenue and restraining risky debt from bailout-prone institutions. And Congress isn't going to pass it.

But the Federal Reserve has been promulgating regulations to curb borrowing by the largest banks, and it could go further in this regard. The Fed could also promulgate rules in coordination with other bank regulators via the Financial Stability Oversight Council. The Fed and most of the other FSOC member agencies are formally structured to be independent of the administration, so the White House is reluctant to say what they think they should do in public. But at this point, all the key personnel were appointed by Barack Obama, so his ideas certainly have some influence.

Senior White House officials indicated to me Thursday afternoon that they are aware of the possibility of "non-legislative" paths toward their objective on this score. They would rather have Congress pass a law, because that would give them revenue that could be used to finance middle-class tax cuts. But as far as Wall Street is concerned, the important thing is that the GOP can't save them from new curbs on bank borrowing. That power exists within the executive branch and among a Federal Reserve Board entirely composed of Obama nominees.