Jon Huntsman vs. the banks?

Two weeks ago, I criticized Jon Huntsman for running a conventional campaign that promised a new tone but shied away from offering new or bold ideas. But there are signs that that’s changing. Maybe.

(Jim Cole - AP) James Pethokoukis reports that Huntsman is unveiling a plan to “set a hard cap on bank size based on assets as a percentage of GDP.” If banks exceed that cap, they get taxed. Huntsman says we should “impose a fee on banks whose size exceeds a certain percentage of GDP to cover the cost they would impose on taxpayers in a bailout. The fee would incentivize the major banks to slim themselves down; failure to do so would result in increasing the fee until the banks are systemically safe. Any fees collected would be used to reduce taxes for the broader non-financial corporate sector.”

This is similar to the Obama administration’s thinking. They oppose breaking up the big banks or taxing financial transactions tax, but they support a “financial crisis responsibility fee”: a tax on the largest banks to pay back the cost of TARP. Huntsman takes this a bit further, in that his tax would presumably be ongoing. But not much further. If the tax is merely to cover the cost of a bailout, the tax could be quite small.

As of yet, Huntsman hasn’t released the details needed to say whether this is a bold new plan or a repackaging of the Obama administration’s ideas. He’s also suggesting a hard limit on leverage (the amount a bank can borrow against its assets) but, again, there are few details, so it’s impossible to say what Huntsman intends to do, or whether it could succeed.

Huntsman is inching towards an interesting and perhaps even courageous position on financial reform. Where most Republican presidential candidates simply want to repeal Dodd-Frank, Huntsman is suggesting he’d like to go further. But as of yet, he hasn’t quite done so.