Saturday Short Reading

1a

At the Justice Department, senior officials like to congratulate themselves on the headline-making, big bucks settlements they have imposed upon banks and lenders for their part in causing the 2008 mortgage meltdown that sparked the biggest American financial crisis since the Great Depression.

But wait a moment. Those settlement figures are not quite what they seem. Buried deep in the announcements of the astronomical sums that Wall Street banks are being forced to pay is a dirty secret: A big chunk of the hundreds of billions of dollars banks have paid in settlements to various federal agencies and regulators since 2010 is deductible from the taxes banks and lenders pay.

When is a fine not a fine? When it can be put against your tax bill.

Because settlements can be deducted from tax liabilities, for nearly every dollar a bank or lender has pledged to pay in cash or pony up in other ways—such as through buying back soured mortgage-backed securities, extending cheaper loans or forgiving failed loans held by struggling homeowners—up to 35 cents will find its way back into bank coffers, a reflection of the 35 percent federal corporate tax rate.

Deep in the legalese weeds of the settlement documents lies buried treasure. Big banks such as Bank of America and JPMorgan Chase will receive deductions against the corporate tax that will amount to between half and nearly three-quarters of their multibillion-dollar settlements, at least. Meanwhile, midsized banks and nonbank lenders generally get to deduct the whole shebang.

Under Attorney General Eric Holder, whose agency has not prosecuted a single major bank or executive in the aftermath of the 2008 meltdown, the Justice Department has been criticized, not least by Democrats, for believing banks are too big to fail and their top brass too big to jail. But here’s the twist. It turns out that banks are also too big to tax: Windfall tax deductions set against the civil settlements imposed by the Justice Department total more than $44 billion, according to Newsweek estimates.

That’s a big sum. Yet it is not a figure the Justice Department appears aware of. In fact, the nation’s top law enforcement agency in charge of cracking down on perpetrators of the mortgage crisis says it has no clue exactly how much money and consumer-relief services the banks have agreed to hand over in settlements with the agency—or how much of a tax deduction the banks are getting through the settlement deals.

Asked by Newsweek the grand total of all mortgage-related settlements between the agency and banks and nonbank lenders since the 2008 crisis, an agency spokeswoman says, “A global figure? We just don’t have that.”

@ NEWSWEEK

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About Den

Always in search of interesting things to post. Armed with knowledge and dangerous with the ladies.
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23 Responses to Saturday Short Reading

  1. David B. Benson says:

    Lawyers can’t add anyway.

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  2. David B. Benson says:

    Foggy today. No rain yet.

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  3. º¿carol says:

    I know I came here yesterday, yet I didn’t see a comment from me there. Weird. I AM losing my mind.

    Cleaned the bathroom today, did the wash, dusted the bedroom, made another Apple Crisp, house smelled heavenly of apples, still does. Then we watched “Divergent” I liked the movie, but I suspect it went over Bob’s head.

    Really cold and windy all day yesterday and all night. Still nippy today. Yesterday’s weather was bad for the Trick or Treaters.

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    • º¿carol says:

      Dryer going to buzz soon and I’ll have to run downstairs to hang the clothes. I dry the clothing 20 minutes, then hang them up to dry the rest of the way. That way I don’t waste more electricity than necessary, and clothes don’t shrink. Been doing it that way for over 30 years.

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    • Den says:

      You were here Thursday, no one got deleted, with the activity level of this sluggish bunch I doubt there will be any. I have been busy doing busy work like cleaning and such, my ass gets sore if I sit too long so the laptop sits, lonesome and neglected, watched Formula 1 qualifying in Austin TX of all places, nice track tho. Mercedes leads the pack.

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  4. º¿carol says:

    Two explosions of space-related vehicles. Scary to have such a dangerous thing in private hands. I’m sure some billionaire will pay millions to take a ride on one of them.

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  5. º¿carol says:

    Time to set the clocks back and I STILL hate that!

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  6. David B. Benson says:

    Are these the dazed days?

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  7. David B. Benson says:

    WSU feetsball not having a good season.

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  8. Den says:

    Tonites project, count these,

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