Frank Wants Tax on Banks, Hedge Funds to Subsidize Housing Programs

House Republicans may have succeeded in passing legislation to end federal housing programs that provide assistance to unemployed homeowners and fund efforts to clean up vacant foreclosed homes, but their Democratic counterparts aren't going to take it lying down.
[IMAGE] Rep. Barney Frank, the top-ranking Democrat of the House Financial Services Committee, has introduced legislation that would require the biggest banks and hedge funds to cough up $2.5 billion to keep those very same programs alive.

On Wednesday, a ""measure that would end"":http://dsnews.comarticles/house-votes-to-rescind-1b-in-neighborhood-stabilization-grants-2011-03-16 HUD's Neighborhood Stabilization Program (NSP), which provides funding to local governments and nonprofits for the acquisition and redevelopment of foreclosed and abandoned homes, passed the House with a 242-182 vote.

Less than one week earlier, the House ""voted 242 to 177 to terminate"":http://dsnews.comarticles/house-votes-to-end-emergency-homeowner-relief-program-2011-03-11 the Emergency Homeowner Loan Program (sometimes referred to as the Emergency Mortgage Relief

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Program), which provides temporary mortgage payment assistance to homeowners who've lost their jobs.

On Thursday, Frank introduced the Emergency Mortgage Relief and Neighborhood Stabilization Programs Cost Recoupment Act (H.R. 1151).

The measure would require the secretary of the Treasury to impose a levy on financial institutions with $50 billion or more in assets and hedge funds with $10 billion or more in assets.

The amount paid by each individual firm would be assessed based on risk, to bring in a collective total of $2.5 billion, which would be used to offset the cost of assistance to unemployed homeowners under the Emergency Homeowner Loan Program and for states and communities under the Neighborhood Stabilization Program.

The funding that House Republicans voted to cut for both programs was made available under the far-reaching financial reform legislation that bears Rep. Frank's name â€" the Dodd-Frank Reform Act. His new Cost Recoupment bill is being offered up as an amendment to Dodd-Frank and has been referred to the House Financial Services Committee for consideration.

A similar “big bank” tax was initially included in the Dodd-Frank Act, but it was pulled from the final language to win favor from Republican lawmakers.

The earliest version of the levy was written in to raise $19 billion from big banks to cover the cost of reform measures mandated by the legislation.