“Because that’s where the money is.”

– Willie Sutton, on why he robbed banks

Just when you thought the Obama administration had reached the pinnacle of brain-dead, asinine legislation with the idea of exempting unions from “Cadillac plan” taxes on employer-provided health insurance, along comes the biggest flea-bitten dog to date.

Yes, describing today’s rollout by the president of a $90 billion smash-and-grab of America’s bank vaults as the worst yet. Worse than Waxman-Markey, worse than the GM bailouts, worse than the stimulus and even worse than health care. This effervescent turd isn’t on the scale of some of those legislative packages, no doubt, but for sheer demogoguery and counterproductivity this one takes the prize.

Why? Let’s go through it.

“We want our money back,”Obama said today in introducing this monstrosity. “And we’re going to get it.”

That by itself is a bad signal. The president using a first-person possessive to describe TARP money is off-putting, and whoever loaded that phrase onto his teleprompter did him a disservice. At the least he could have said “the American people want their money back,” though on a day when the American people say they want Obama out of office by a 50-39 vote maybe the president is a little squeamish about trying to speak for us right now.

In such a case, the “we” might be more accurately seen as the Beltway Redistribution Society Obama chairs, and that’s a group which has no problem laying claim to anyone else’s money.

On to the particulars.

The president’s bill would create a “Financial Crisis Responsibility Fee” that would kick in against, as TheHill.com notes…

…roughly 50 financial firms each with at least $50 billion in assets, an administration official said on Wednesday. Of those, 35 would be U.S. firms, 15 would be subsidiaries of foreign-owned firms and 27 would be U.S. banks, the official said.

The 10 largest firms would likely account for 60 percent of the total fee revenue over the decade, the official said.

The fee is 15 basis points (0.15 percent) of each of these banks’ assets not including “core” capital, which assumedly excludes FDIC-insured deposits. This is expected to bring the government some $90 billion in revenue over 10 years – or better put, to take $90 billion out of the private economy over the next 10 years. Considering that banks tend to loan money out in a multiple of 10 against their assets, pulling $90 billion out of their asset portfolio with this tax is akin to shrinking the ability of the banking system to loan money by nearly a trillion dollars over the course of this decade.

The outright stupidity of this is so elementary it’s breathtaking. Virtually anyone can see that robbing banks of capital in a lousy economy is a destructive, idiotic policy.

So how does the president present this plan? Let’s go back to TheHill.com’s piece:

“The financial industry has even launched a massive lobbying campaign, locking arms with the opposition party to stand in the way of reforms to prevent another crisis,” Obama said.

“What I’d say to these executives is this: Instead of sending a phalanx of lobbyists to fight this proposal, or employing an army of lawyers and accountants to help evade the fee, I’d suggest you might want to consider simply meeting your responsibilities and I’d urge you to cover the costs of the rescue not by sticking it to your shareholders or your customers or fellow citizens with the bill, but by rolling back bonuses for top earners and executives.

“And more broadly, I am continuing to call on these firms to put greater effort into helping families stay in their homes, to provide small businesses with needed loans and to embrace, rather than fight, serious financial reform,” he added.

In other words, because private banks – most of which received TARP funds and paid them back at government-issued insurance rates – have now become profitable again and have therefore sought to reward their top managers who have been able to generate black ink again, it’s time to sock them in the mouth with increased taxes.

Those same banks are also supposed to do their civic duty and write down bad loans, when doing so directly affects their capital ratios, rather than exercise their First Amendment rights to petition the government against policies which would even more negatively affect their capital ratios. Let’s not even go into Obama’s suggestion that bankers have less of a right to attorneys than jihadists who carry explosives next to their scrotums in an effort to kill his countrymen over a major U.S. city.

“If these companies are in good enough shape to afford massive bonuses, they are surely in good enough shape to afford paying back every penny to taxpayers,” he added.

According to the Wall Street Journal, it seems pretty clear that the White House thinks this is an issue that can turn things around against a mounting Republican surge. “If you want to be on the side of the big banks, this is a great country. You’re free to do so,” said lead White House flack Robert Gibbs.

The fact is, whether you like the big banks or not is immaterial. Should they be giving bonuses to top managers? Probably not – but if they’ve paid TARP money back it is none of Mr. Obama’s damn business what those bank managers are making. The stockholders of those companies are more than capable of punishing them for paying out stupid bonuses, and their customers are more than capable of taking their deposits or credit accounts and going to some other bank if they don’t like what J.P. Morgan or Wells Fargo is paying their CEO. Demogoguing the issue of what somebody makes for a living in order that the federal government gives itself the power to punish companies for microeconomic choices they should be free to make whether it stings Obama’s nostrils or not is Hugo Chavez banana-republic dictatorship, not American rule of law.

Not to mention that virtually everybody knows the banks will pass this tax on to their consumers, making loans more expensive to pay off and hurting borrowers and depositors alike. None of which helps to grow the economy; the last thing the American people, who have already decided it’s time to rein in spending and ride out the storm, need is to see less disposable income in each paycheck. Obama adviser Valerie Jarrett made clear the administration knows this; she told ABC News that “…what I would say to them from a PR perspective is: How does it look to pass on those fees to your customers….”

Oh, but the banks aren’t loaning enough money, comes the response, and that’s why they need to get the stick.

Well, no kidding. And why do you think that’s the case?

First, it’s risky to loan money now. Who’s borrowing? Some guy who wants to build houses or shopping malls? Yeah, that’s a great credit risk right now. Some guy who wants to start a business? He’s got to be out of his mind in this economy. Some nice lady who wants to buy a house? How stable is her employment situation?

Second, while banks are making money these days they lost a colossal amount before the financial crisis bottomed out. You don’t take a major shot to the shorts like these guys took without it taking a while to rebuild. As such, even the banks which took TARP funds are still undercapitalized compared to where they were three or four years ago; it is completely unreasonable to assume that their lending capacity, much less their courage and willingness to put cash on the street, is going to be what it was then for some time.

Third, banks are scared to lend precisely because of idiotic spectacles like the president and his minions put on today. The investment community uses the term “political risk” in describing the downside of investing in banana republics like Kenya and Indonesia, and it understandably tries to hedge against the governments of those places walking away with large chunks of its capital through hook, crook or dictate once it’s invested.

Something similar is obviously going on now here in America. With Obama’s auto bailouts, in which BONDHOLDERS, including some of these selfsame financial institutions, were bent over and ravaged with vigor in flagrant defiance of established contract and bankruptcy law, following upon the total demogoguery and incompetence of TARP and the AIG situation, including how the government attempted to jury-rig legislation to get at a different set of executive bonuses, and now health care bills in which Democrat constituencies are treated as if they’re nobility while the rest of us are made to pay and pay, lenders are now seeing an America where the rules currently in place could be gone with the next set of deals cut behind closed doors in Nancy Pelosi or Harry Reid’s offices.

Fourth, banks have figured out that they can borrow money from the Fed at virtually zero percent interest in return for buying Treasuries at a minimum three percent rate. Going back to Point One above, if you can make a profit with what is right now zero risk there is no reason whatsoever to engage in private-sector lending when private-sector borrowers are undercapitalized themselves and might default, leaving the lender with busted businesses or depressed real estate to show for a bad loan. In other words, this is a classic example of the government “crowding out” the private sector. If Obama wants to know why the banks aren’t lending to the people, maybe he should look to his own house.

But no, rather than fix the stupid, destructive and invasive policies already in place which are perverting the market and retarding economic growth, Obama has decided the beatings will continue until morale improves. Michelle Malkin says this entire fiasco was cooked up to hide the ball on the thoroughly corrupt and incompetent performance of Treasury Secretary Tim Geithner when he was the chairman of the New York Fed and helped put together the worst excesses of the TARP program in the first place.

Geithner’s work to hide the identity of AIG’s counterparties, when those entities were quite apparently the real reason for the urgency of Bailout Nation in the first place, raises lots of suspicion. Some have surmised the roster of counterparties is going to include a whole lot of sovereign wealth funds from oil-exporting countries who don’t particularly like America, not to mention the ubiquitous George Soros, and that’s why it’s so important to keep their identities quiet to the American people. I don’t know whether any of that is true, but as Malkin says we may get a chance to find out when Geithner goes in for a Congressional rectal exam next week.

Perhaps Geithner will be asked why the real culprits in trashing the financial system, Fannie Mae and Freddie Mac, aren’t going to be hit with the bank tax despite their having taken colossal bailouts and paid out gangster-roll bonuses to their top people. Or perhaps he’ll be asked why the auto companies, whose bailouts actually represent the majority of the projected TARP losses, are included in this latest bit of legislative chicanery.

It probably doesn’t matter. It’s highly unlikely this idiotic bill will pass, despite the attempt by Obama and the Democrats to paint the GOP as the Party of Wall Street Banks in advance of the November elections. It would seem this is all by design; given the quality of governance the Democrats have given us in the past year they’re desperate to find an issue they can hang their hats on, and a Republican filibuster of the bank tax would, they clearly think, serve as just such a life raft. That’s why today we saw Obama use tougher language on bankers than he has ever used against Chavez, Ahmedinejad or Kim Jong-Il.

What we’re seeing is the true extent of Obama’s much-ballyhooed transparency. It only applies to his political ploys – not his governance.