Senate's Shelby Says Obama Bank Tax Proposal Is Dead on Arrival

The Republican lawmaker in charge of banking policy in the Senate vowed to block President Barack Obama’s proposal for a $110 billion tax on big financial companies.

Senator Richard Shelby of Alabama said today that the plan makes no sense, because banks would just pass new fees on to their customers. He called the proposal “dead on arrival.”

“I don’t know any Republican, myself included, that would support any of that,” Shelby said in an interview. Republicans control both the Senate and the House.

The White House announced the proposal ahead of Obama’s State of the Union speech tonight, as the president tries to highlight the gap between wealthy Americans and lower-income households. His plan would impose a seven-basis-point fee on the liabilities of the nation’s largest banks, investment firms and insurers.

Financial companies are already fighting the proposal. The Securities Industry and Financial Markets Association, Wall Street’s largest lobbying group, said it’s an unnecessary attempt to rein in risk following the approval of the 2010 Dodd-Frank Act.

The Financial Services Forum, a group representing the chief executives of Wall Street’s largest firms, released a statement today urging Congress to reject the proposal.

“As the largest financial institutions continue to simplify, reduce risk and leverage, build capital, provide the credit to keep the economy growing, and make the necessary investments to protect customers from cyber threats, it would be counterproductive to layer on one more way to make it more difficult to achieve those public goals,” the group said.