PhillyDeals: Why big banks should be paying big taxes

The

Obama

administration wants the biggest banks to pay more taxes -

and

to make more loans.

The president says that's not a contradiction. If the biggest banks can afford thousands of million-dollar manager salaries and "obscene" trader bonuses, he figures they can afford a $10-billion-a-year tax on bank investments to defray the cost of the 2008 bank bailouts.

Why just big banks, most of which already repaid what the United States invested in them, with interest?

"Too big to fail" banks are "imposing the most significant costs on the taxpayer and the economy as a whole, so we designed a fee that would put the burden on those institutions," Obama adviser Gene Sperling told me in a White House conference call for us "regional reporters."

But won't higher taxes make big banks lend less, slowing the weak economy?

"I don't buy that," said John Chrin, who quit his job as a top JPMorgan Chase & Co. bank deal-maker last year to teach finance at Lehigh. The tax is "a blunt instrument," but the president is right, he added.

The federal government saved the banks, not just by bailing them out, but by also stabilizing markets, he told me. Bankers need to show "self-restraint."

Chrin's old boss, JPMorgan chairman Jamie Dimon, warned Obama not to "punish" companies with higher taxes. But Chrin says his old bosses and clients ought to know better than to pocket the windfall. "The government is saying, 'If you're not going to regulate yourselves, then this is how we're going to nudge you. You're not getting a free ride.' "

Developer

Carl Dranoff's

crews are putting the marble and wood panels up at 777 S. Broad St.; the opening's scheduled for March 11.

Dranoff had wanted to build 777 as condos, like Symphony House up the street. Instead, it's high-end apartments. Sign of the times: "People are buying less, and renting," as home values fall.

"This is, so far as I know, the only new residential building that will be delivered in Philadelphia in 2010," Dranoff told me as he greeted foremen on the site. "There's probably going to be a hiatus of several years before the next big project in Philadelphia gets built. The spigot is off" for most construction.

He acknowledged, though, that housing developers Bart Blatstein and Eric Blumenfeld were still assembling conversion projects up on North Broad.

Meanwhile, he is focused on government-backed projects:

Ardmore: Dranoff's designing a train station and 600-space garage. "SEPTA's putting up $10 million." The project has applied for $32 million in federal stimulus funds, $6 million in federal transit dollars, "and $6 million from a state Redevelopment Assistance Capital [Program] grant." He'd add stores and offices.

When? "Could start to happen late this year, if we get the stimulus."

Camden: "You remember I did the Victor Building" at the former RCA plant, in 1990? He got the city to grant "development rights for the area all around it." He plans 86 condos in another ex-RCA factory: Radio Lofts. "The groundbreaking's next month."

Newark, N.J.: On Tuesday, Dranoff says, New Jersey approved $38 million in Urban Transit Hub tax-credit grants for Dranoff's 44-story building and 600-space parking garage near Newark's Amtrak station.

"The city approved the site in October." Groundbreaking has been delayed until next year. Besides transit credits, the project needs federal New Markets tax credits and credits for affordable units, which Dranoff hopes will draw artists from the New Jersey Performing Arts Center across Center Street.

Dranoff says national developers "have shied away from Philadelphia. It's hard to assemble land here. It's hard to develop." But Symphony House is "93 percent sold," and that enabled him to pay off the $98 million he borrowed ($40 million from US Bank, $25 million each from PNC and Citizens, $8 million from Compass.)

He doesn't owe? "I knew this day was coming." He remembers the mid-1970s real estate bust, the early 1980s credit crunch, the S&L real estate crisis. "You learn to plan for the next downturn," with cash on hand. Survive, "and you win."

Why big institutions should pay big taxes. PhillyDeals, D3.