A Quiet Windfall For U.S. Banks With Attention on Bailout Debate, Treasury Made Change to Tax Policy

[kpete]

Source: Washington Post

A Quiet Windfall For U.S. Banks
With Attention on Bailout Debate, Treasury Made Change to Tax Policy

By Amit R. Paley
Washington Post Staff Writer
Monday, November 10, 2008; Page A01

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 "They basically repealed a 22-year-old law that Congress passed as a backdoor way of providing aid to banks."

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2008/11/09/AR2008110902155.html?wprss=rss_politics/administration

[PSPS]

1. It doesn't work that way

Only congress can pass or repeal taxing statutes. I'm sure the treasury department in bushworld thinks it can change this by fiat, but it can't in the real world.

This is something the IRS has to deal with and I hope they will, once Obama replenishes its bush-eviscerated ranks. Otherwise, why should I even bother accurately reporting my income and then paying taxes on it?

[Grinchie]

2. With the stupidity prevalent in todays population, anything is possible

And they are counting on it.

[truedelphi]

5. Except the financial world has for at least a decade been able to make up its own rules

First they created "Credit Default Swaps" which were insurance by another name.

So because those were insurance, you would think that the regulatory agencies would descend upon any firm having anything to do with these financial instruments, but instead the regulatory agencies did not.

I wish you or I could treat reality like that. Gee I have a great medical device, but don't want to bother with FDA approval, so I will sell it as a novelty.

[Trajan]

3. This story is over a month old ....

A great expose ... but it is not LBN ....

[DeepModem Mom]

4. K&R