In an effort to help recoup losses from the Troubled Asset Relief Program (TARP) and battle a record federal deficit of $1.4 trillion, President Obama is planning to raise approximately $120 billion by imposing fees on the nation’s largest financial institutions, Bloomberg.com reported.

Obama is expected to formally announce the plan on Thursday. More solidified details will be in the fiscal 2011 budget the president will submit next month, and a final structure of the fee and how to target the big banks that returned to profitability have not been determined.

The move is an effort to cover the $120 billion the Treasury Department estimated it will lose from TARP, according to Bloomberg.com.

Wayne Abernathy, executive vice president of the American Bankers Association, told Bloomberg.com that he thought the potential measure may be unfair because banks would be forced to pay for parts of the bailout that didn’t work. He also said the bailed-out banks are paying back what was borrowed from the Treasury.

Two-thirds of the government’s investment in the banking system — $165 billion — has been repaid, and TARP collected $12.9 billion in fees, dividends and interest.

Many major banks are expected to announce massive earnings and bonuses for their employees at the end of the week, WashingtonPost.com reported. Anger in Washington about those moves is seen as a reason the fees are being proposed.

Wells Fargo & Co., which will announce fourth-quarter earnings on Jan. 20, reported $3.2 billion in third-quarter earnings in October, a 98 percent increase compared with the third quarter of 2008 and the third consecutive quarter of record earnings. In December, Wells Fargo repaid its TARP debt by redeeming the $25 billion of preferred stock it issued to the U.S. Treasury, paying $1.44 billion in dividends on the money it borrowed in October 2008. The Treasury continues to hold warrants to purchase approximately 110 million shares of Wells Fargo common stock at an exercise price of $34.01 per share.

Government officials are also discussing exempting automakers and insurer American International Group Inc. from the fee, even though these companies are expected to represent a large chunk of the bailout losses.

The Federal Reserve, meanwhile, will return about $45 billion to the U.S. Treasury for 2009, according to Washington Post calculations. This is the strongest earnings performance in the 96-year history of the Fed, and a sign that it has been successful so far in protecting taxpayers with its efforts to support the economy.