Obama said he's proposing a new tax on the businesses -- financial institutions with more than $50 billion in assets. The language of the proposal describes companies similar to those affected by pending congressional legislation that may regulate systemic risk, which does include some of the largest insurers. But it's so far been unclear to insurance associations exactly which companies might be included in this new fee -- 0.15% fee of a company's liabilities -- that could near $100 billion over the next decade.
In a public announcement, Obama called it a "financial crisis responsibility fee."
"Many originally feared that most of the $700 billion in TARP money would be lost," Obama said, pointing out that the majority of it has now been recovered, earlier than planned. "That's not good enough," he said. The overall program is still projecting a loss of more than $100 billion. "We want our money back, and we're going to get it."
The banking and investment industries have raised immediate strong objections to the idea, pointing out that many of them have already paid back money from TARP -- with interest. But the insurance trades have been more hesitant as they try to work out its ramifications.
It was an extremely limited segment of the insurance industry that participated in the TARP. Only the life sector requested TARP help, and of the list of companies accepted for aid, only two accepted payouts: Hartford Insurance Group and Lincoln National Corp. Lincoln -- whose assets were at more than $148 billion, according to a BestLink report on Lincoln's life companies -- could potentially fit within the broad profile of companies referred to by the president, though it's uncertain what variables will be considered. Attempts to reach the company for comment were not immediately successful.
Congress, which has yet to pass final legislation on financial system reforms, would need to approve this proposal before the fee is assessed.
Jack Dolan, spokesman for the American Council of Life Insurers, said in a statement ACLI can't comment until "we have a clear understanding of how the proposal will impact our companies and the policyholders we protect."
The American Insurance Association's response was similarly hesitant. Spokesman Blain Rethmeier said it's unclear how this tax will impact the property/casualty industry until the final details are revealed. The industry should be recognized and not penalized for the low risk it poses to the broader financial system, he said in a statement.
The Property Casualty Insurers Association of America's Senior Vice President Robert Gordon said the proposal seems to be aimed at institutions that own depository institutions, bank holding companies, thrift holding companies and securities firms. "We are working to identify the potential impact of this tax on property/casualty insurers and ultimately consumers," he said in a statement.