President Obama has just proposed a fee on financial firms, stating his commitment “to recover every single dime the American people are owed.” The measure, called the Financial Crisis Responsibility Fee, will only apply to the largest firms with over $50 billion in assets. The White House expects it to raise $117 billion over 12 years and $90 billion over the next ten.

The Financial Crisis Inquiry Commission, which was established to examine the causes of the economic and financial crisis, kicked off the first day of its first hearing today. The witnesses on the main panel today were the chairmen and CEOs of Goldman Sachs, JP Morgan & Chase, Morgan Stanley, and Bank of America. Commissioner statements and testimony can be seen here.

The Federal Reserve announced, this morning, that it will transfer $46.1 billion in FY2009 profits over to the Treasury, higher than the $31.7 billion in 2008 profits (Thanks to Donald Marron for pointing this out). The Fed reported that the increase in profits was due largely to earnings on additional securities holdings.

On January 8, the FDIC reported that it has taken over an additional bank (Horizon Bank) for a cost to the FDIC of about $540 billion. This brings the total number of failed banks since the beggning of 2008 to 167.

Laura Tyson, a former chair of President Clinton’s Council of Economic Advisers, warned in a Bloomberg op-ed this morning that cutting back on fiscal stimulus too early might undermine the economic recovery, but that deficit reduction will be a necessity when the economy recovers. According to Tyson:

On December 18, the FDIC reported that it has taken over an additional seven banks (First Federal Bank of California, Imperial Capital Bank, Independent Bankers' Bank, New South Federal Savings Bank, Citizens Stat

We hope all of our readers had very happy holidays. Now that we are back from our vacation, there is a lot to report on regarding congressional actions right before the holidays, as well as expected actions once they return.

Debt Limit

In a blog post earlier this week, Stan Collender presented a laundry list of suggestions about how deficit hawks can be more effective. As a proud member of that group, we welcome Stan’s advice. Having reviewed the list, we were pleased to find that we already are doing everything that Stan wanted. We’re not sure who Stan is writing about, but it’s obviously not us.

This afternoon, the House passed a $154 billion economic aid package. Below we have listed the major spending areas within the bill:

The IRS has agreed to give up billions in tax money in exchange for Citigroup’s repurchase of $20 billion of its assets held by TARP. In a notice released on Friday, the IRS will exempt up to $38 billion in future Citi profits from taxable income.