After days of speculation, the president today confirmed reports that the government will seek to recoup losses from its massive financial system bailout by proposing a new tax on major banks.
"We want our money back, and we're going to get it," President Obama said sternly this afternoon at the White House.
What the government calls a financial crisis responsibility fee would be levied on roughly 50 banks with assets of $50 billion or more. The goal is to raise at least $90 billion over the next 10 years.
The announcement comes as politicians and critics wring their hands over news that the country's top five financial institutions -- Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Morgan Stanley -- have allocated roughly $90 billion for overall compensation, with bonuses comprising more than half that figure.
"If these companies are in good enough shape to afford massive bonuses, they are surely in good enough shape to afford paying back every penny to taxpayers," Obama said.
The administration estimates taxpayers will be on the hook for $117 billion of the $700 billion they loaned through the bank bailout, the Troubled Asset Relief Program.
Wall Street's biggest banks have repaid the loans with interest, and some argue that taxing them now would be unfair.
"I think using tax policy to punish people is a bad idea," JPMorgan CEO Jamie Dimon told ABC News Wednesday. "… I also think it's very hard to have the industry pay for, you know, the auto companies. At one point you've got to be a little fair."
But Obama showed little sympathy for the argument that taxing the banks is unfair.
"My commitment is to recover every single dime the American people are owed," the president said, adding that his determination to achieve this goal was only heightened by reports "of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people, folks who have not been made whole and who continue to face real hardship in this recession."
U.S. Treasury Secretary Timothy Geithner echoed some of the president's statements later today.
"We thought it was economically sensible, fair, good policy, legally necessary to propose now how to make sure that the costs of this are not born by people who were innocent victims of all the wreckage," he told CNBC.
Obama included the tax in his fiscal year 2011 budget proposal.
The financial industry has been girding for battle over the tax. For days, industry lobbyists have been spreading the message that a tax on banks is no way to encourage bankers to increase loans to small businesses or improve loan terms for troubled homeowners. Some critics of the proposal have suggested that banks will simply pass that tax onto consumers, but the president suggested the banks take the money out of their bonus pool instead.
"Instead of sending a phalanx of lobbyists to fight this proposal, or employing an army of lawyers and accountants to help evade the fee, I'd suggest you might want to consider simply meeting your responsibilities," he said. "I'd urge you to cover the costs of the rescue not by sticking it to your shareholders or your customers or fellow citizens with the bill, but by rolling back bonuses for top earners and executives."
One prominent economist Wednesday voiced tentative support for the proposal.
The president is responding to "very real anger" from the American people and the ballooning budget deficit, former Federal Reserve chairman Paul Volcker said yesterday during a meeting of the Economic Club of New York, where Volcker was the featured speaker.
It's not unfair to say that big institutions that benefitted "one way or another from the bailout" should now "carry some of that burden and it's a question of how they do it," Volcker said.
"It's not an unreasonable response," he said. "He has to do something -- the law says he has to do something ."
Former Clinton economic adviser and Princeton professor Alan Blinder also emphasized the president's legal obligations.
"There's a congressional mandate to get back the money. It's not like one of the choices, if you obey the law, is to do nothing, so it becomes an issue of what's a better or worse way to do it," Blinder said in an interview at the Economic Club meeting.
Blinder noted that the tax is supposed to be based on the amount of risk a bank takes.
"I like the concept, but I worry about the practice," Blinder said, adding that he still had to review the details of the proposal.
With reports from ABC News' Alice Gomstyn and Matthew Jaffe.