Washington Post: A Quiet Windfall For US Banks
By:
TraderMark Thursday, November 13, 2008 1:57 PM
Ever get that pit in your stomach when you see something so very wrong? I wanted to give
Paulson and co. some little benefit of the doubt, which is difficult for me but after what sort of fleecing is being down, and outright lies (we want transparency! we love transparency!) - it's just a ridiculous banana republic we are creating. The Washington Post has
a damning article on a little known tax provision that was thrown into the TARP plan in the midst of the crisis. What a crock; this shows you who was being looked after while we were treated to the dog and pony show on TV. The fact that many of these banks were the bad actors that either originated or enabled most of the chicanery
infiltrating the entire US system, makes it that much more offensive.
Again, you cannot create fiction like this - no one would believe you it is so over the top. This picture actually shows the reality of the situation; who is really the boss? Foxes run the henhouse - again.
- The financial world was fixated on Capitol Hill as Congress battled over the Bush administration's request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention. But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.
- The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin.
- "Did the Treasury Department have the authority to do this? I think almost every tax expert would agree that the answer is no," said George K. Yin, the former chief of staff of the Joint Committee on Taxation, the nonpartisan congressional authority on taxes. "They basically repealed a 22-year-old law that Congress passed as a backdoor way of providing aid to banks."
- The change to Section 382 of the tax code -- a provision that limited a kind of tax shelter arising in corporate mergers -- came after a two-decade effort by conservative economists and Republican administration officials to eliminate or overhaul the law, which is so little-known that even influential tax experts sometimes draw a blank at its mention.
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