A windfall tax should be levied upon publicly-financed investment banks

True, I won the debate, but I would rather lose to a worthy opponent than win by default. Nevertheless, I will still try and win this one by addressing Mr. Latham's rebuttals as follows: 1 – The term investment bank seems to still being used in the media to describe banks, or the divisions of banks, that deal with institutional investors and high net worth individuals rather than provide bank accounts, loans and mortgages for ordinary customers. In any case, when these banks were bailed out they certainly were known as investment banks. . http://business.timesonline.co.uk... 2 – There is only one thing that bankers hate more than paying tax and that is what they would describe as "government interference in their affairs". That is why some banks were reluctant to take the public cash offered them – they suspected that the government would demand some control over how their business was run in the future. However, given their woeful record of catastrophic mismanagement over the preceding years, the government had no option but to persuade them to accept the money and ask them to use it to recapitalize themselves. The reason why some banks had to be coerced into this is that the banking industry which is a public utility as well as a commercial venture and a collapse would have caused a total economic meltdown. It is also true that Goldman and Morgan took relatively little compared to others such as Bank of America. On the other hand, banks such as Barclays Capital took absolutely nothing and even bought much of Lehman's business off the administrators. However, the point is that the banks that were loaned money took it on the understanding that they would use it to recapitalize in order to prevent any repetition of the financial chaos that had ensued - it was certainly never intended that profits earned on the loans would be distributed between the very bankers who were responsible for the collapse. 3 – Goldman wanted to repay their loans as quickly as possible so that they could release themselves from any government intervention and thus be free to pay themselves huge bonuses. This is why Goldman's 30,000 UK employees will get an average ï¿½500,000 ($820,000) each, although in reality, the bonuses will not go to the back office boys and girls or the folks that work in the post room or staff restaurant, but instead be will be divided between the top traders in multiples of tens of millions. That is exactly the type of bad management decision that caused the economic collapse in the first place – the banks should be using that money to recapitalize themselves in case the recession is ‘W'-shaped and they need cash to sustain themselves through more lean times. The fact is that these banks were financed by the public and have a duty to act responsibly in return. They have not discharged this duty and should, therefore, suffer the consequences in the form of a windfall tax. 4 - A windfall tax may be unconstitutional in the US – my opponent is American and I am not so I will not argue with him on that point. However, a windfall tax was applied to the banks in the UK in 1981 under similar economic circumstances. . http://www.timesonline.co.uk... 5 – A condition of the bail out of the banking industry, the top executives did, indeed, agree to limit their pay – in other words "mend their ways". They have reneged on this agreement but the government must take some of the blame for this because they should never have trusted them in the first place – they should have made it a legally binding agreement – after all, a typical bankers' whole raison d'ï¿½tre is to let nothing stand in their way of making as much money for themselves as possible – they have no sense of social responsibility, indeed, it could be said that their consciences are their accomplices rather than their guides! 6 - The 50% would be taken on post-tax profits. So if a bank announces that it has made a $50 billion profit after tax, $25 billion will then be due to the government and $25 billion will be for the bank to either recapitalize themselves or, as is more likely, to pay themselves (still massive) bonuses. This is the reason why regulation to moderate remuneration will still be required. 7 – The difference between an overpaid rock star or sportsman and an investment banker is that if a celebrity chooses to spend his money on private planes and ocean-going yachts and lavish parties rather than invest it sensibly and they go to the wall as a result, it is only they that suffer. However, when banking executives do the same we all suffer. In conclusion, I accept that windfall taxes are inherently unfair – if they are applied retrospectively to squeeze money out of prudent companies who have made big profits as the result of their own endeavours. That is why I do not propose to apply such taxes to banks such as Barclays Capital who didn't have recourse to the public purse because they were able to sustain themselves through, and even profit from, the collapse of the banking industry. It is only the incompetent, greedy banks that were obliged to go cap in hand to their governments and who now, despite all that has happened, are awarding themselves massive payouts, that should be subject to a windfall tax. Thank you.