IRS Decision Enables Banks to Shift Their Losses to the Public

By
Real Estate Agent with Inactive

So, do IRS decisions (the IRS is a bureau of the Dept. of Treasurey) that function as change to tax laws carry the same weight as law? Yes, they do.

A tax decision which can only be interpreted as being written specifically for the benefit of banks was issued just prior to the Wells Fargo & Co. purchase of Wachovia Corp. 

This is what happened. Two days before the October 2nd 2008 announcement of the Wells Fargo plans to purchase Wachovivia, the Internal Revenue Service issued the controversial tax change.

What was the change?

Prior to this decision, businesses, including banks, were restricted in the amount by which they could lower their tax liability when they purchased another company with business losses. But this IRS decision which exempted banks, essentially removed the cap that limited how much a healthy bank could deduct from its taxes by realizing the losses that came with the purchase of another troubled bank.

How did this benefit Well Fargo & Co.

This decision enabled and will enable Wells Fargo to use $74 billion in losses that came with the purchase of Wachovia to shelter its profits, provided that it continued and will continue to make money after the purchase.

Apparently, PNC's purchase of National City will also qualify from the bank exemption created by this decision which should be closed if the current version of the ecomonic stimulus plan is approved.

Does something in your gut tell you that this is wrong? Will anyone be held accountable?

This is yet another example of how the banks manipulate the system to shift their losses to the public.

Posted by

George Bennett, Principal Broker, Affiliated, GRI in Port Orford, OR 97465

Affiliated with 'Neath The Wind Realty Inc.

Comments (2)

MARTY HANCOCK
LINCOLN MORTGAGE - Sewell, NJ

George,

Good post. The banks you mention have used the gift of future taxpayer money, which had been supposedly earmarked for foreclosure modifications, to acquire other banks. We fund the acquisitions, while the banks refuse to make any modifications to aid troubled homeowners. Then the IRS paves the way for them to maximize tax breaks that they wouldn't, without that taxpayer money, be in a position to receive. Amazing.

Somebody left the fox in charge of the henhouse.

marty

Feb 08, 2009 09:49 AM
George Bennett
Inactive - Port Orford, OR
Inactive Principal Broker, GRI

These bankers are incapable of acting any other way. They need to be removed and replaced.

Feb 08, 2009 11:00 AM

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