The proposal calls for Fannie Mae and Freddie Mac, which have been under U.S. control since the 2008 financial crisis, to be merged into a single government-owned entity “to ensure that taxpayers are fully compensated for the risks they are assuming” and that lower-income households are served.
The Democratic Party first officially embraced financial transaction taxes in its 2016 party platform, but left room for the size and scope of the levy. Public Citizen, an advocacy group for progressive causes, said middle-income families would pay about $13 a year with a 0.1% tax on trades. The top 10% of income earners would see costs related to their retirement accounts increase an average of $155 a year and owe additional taxes ranging from $58 to $288 annually, according to their estimates.
The 2008 financial crisis undermined faith in the financial system, and authorities should be doing everything they can to fix the flaws it revealed, Bloomberg said in his proposal.
“Yet the Trump administration is rolling back what safeguards were put in place, and none of the candidates for president is offering a viable alternative,” Bloomberg said in his plan.
On Fannie Mae and Freddie Mac, Bloomberg would work with regulators and Congress to come up with a solution. The Trump administration, which has vowed to free Fannie and Freddie but hasn’t ironed out all the details, has pledged to go it alone without the help of Congress if necessary.
The plan calls for restoring the Volcker Rule and making enforcement more effective, by focusing on the outcome of speculative trading -- big gains and losses -- rather than trying to discern traders’ intent. Regulators appointed by President Donald Trump are in the process of rolling back the Dodd-Frank Act trading curbs with steps including allowing a smoother path for banks to do business with venture capital funds.
Bloomberg’s plan would also restore payday-lending and mandatory arbitration rules at the Consumer Financial Protection Bureau and give the agency jurisdiction over auto lending and credit reporting. It also would create a dedicated corporate crime group at the Justice Department and strengthen protections for whistle blowers.
Bloomberg’s progressive rivals have backed aggressive steps targeting Wall Street. Warren has proposed a 21st Century Glass-Steagall Act aimed at breaking up the big banks and called for overhauling the private-equity industry “so that Wall Street executives can’t bleed companies dry and walk away with millions while workers lose their jobs.”
This article was provided by Bloomberg News.