The Obama administration's proposal to subject banks to a tax gained steam after the Senate decided to drop a measure to create a $50 billion resolution fund prepaid by financial institutions. The move means the House's version of the fund measure will not survive. At a congressional hearing, Treasury Secretary Timothy Geithner underscored the White House's preference for a bank tax. "The virtue of this design is ... you can think of it as a 'too big to fail' tax, a tax on leverage, a tax on risk but its purpose ... is to meet the legal obligation under the law to cover ... [the state's] losses," Geithner said.
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