Comments on: WAPO: Treasury Illegally Repeals Tax Law http://www.ritholtz.com/blog/2008/11/treasury-dept-illegally-repeals-tax-law/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Sat, 21 Nov 2009 11:47:29 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: “Investing” in AIG, et. al.: understand the scandal - Macro Principles http://www.ritholtz.com/blog/2008/11/treasury-dept-illegally-repeals-tax-law/comment-page-1/#comment-167808 “Investing” in AIG, et. al.: understand the scandal - Macro Principles Mon, 04 May 2009 19:36:32 +0000 http://www.ritholtz.com/blog/?p=8775#comment-167808 [...] something much more serious is at stake here. Here’s Barry on the $140B handed out illegally by the Treasury to banks under the form of tax breaks. Steve Randy Waldman follows suit: But, today [...] [...] something much more serious is at stake here. Here’s Barry on the $140B handed out illegally by the Treasury to banks under the form of tax breaks. Steve Randy Waldman follows suit: But, today [...]

]]> By: Carlomagno http://www.ritholtz.com/blog/2008/11/treasury-dept-illegally-repeals-tax-law/comment-page-1/#comment-125486 Carlomagno Tue, 11 Nov 2008 09:39:23 +0000 http://www.ritholtz.com/blog/?p=8775#comment-125486 BTW, the US DOJ published a guide to FOIA which summarises relevant jurisprudence. The description of the issue that seems most relevant to this case (whether the information is privileged or confidential) can be found starting on p. 13 of this document: http://www.usdoj.gov/oip/foia_guide07/exemption4.pdf BTW, the US DOJ published a guide to FOIA which summarises relevant jurisprudence. The description of the issue that seems most relevant to this case (whether the information is privileged or confidential) can be found starting on p. 13 of this document:

http://www.usdoj.gov/oip/foia_guide07/exemption4.pdf

]]> By: Carlomagno http://www.ritholtz.com/blog/2008/11/treasury-dept-illegally-repeals-tax-law/comment-page-1/#comment-125485 Carlomagno Tue, 11 Nov 2008 09:21:27 +0000 http://www.ritholtz.com/blog/?p=8775#comment-125485 @Jekyll Island: Federal Reserve is overed by FOIA. See http://www.federalreserve.gov/generalinfo/foia/default.cfm. @Jekyll Island: Federal Reserve is overed by FOIA. See http://www.federalreserve.gov/generalinfo/foia/default.cfm.

]]> By: Jekyll Island http://www.ritholtz.com/blog/2008/11/treasury-dept-illegally-repeals-tax-law/comment-page-1/#comment-125446 Jekyll Island Tue, 11 Nov 2008 01:47:42 +0000 http://www.ritholtz.com/blog/?p=8775#comment-125446 Will be interesting to see how a Federal Judge deals with Bloomberg's FOIA request since FOIA applies to Federal Agencies and the "FED" isn't one... Will be interesting to see how a Federal Judge deals with Bloomberg’s FOIA request since FOIA applies to Federal Agencies and the “FED” isn’t one…

]]> By: Pat G. http://www.ritholtz.com/blog/2008/11/treasury-dept-illegally-repeals-tax-law/comment-page-1/#comment-125418 Pat G. Mon, 10 Nov 2008 23:20:34 +0000 http://www.ritholtz.com/blog/?p=8775#comment-125418 Thanks for that link Winston. I had heard something about that earlier today on news radio. It is simply unbelievable. Then again, no it's not. Thanks for that link Winston. I had heard something about that earlier today on news radio. It is simply unbelievable. Then again, no it’s not.

]]> By: Patrick Neid http://www.ritholtz.com/blog/2008/11/treasury-dept-illegally-repeals-tax-law/comment-page-1/#comment-125394 Patrick Neid Mon, 10 Nov 2008 21:31:04 +0000 http://www.ritholtz.com/blog/?p=8775#comment-125394 from the article: "Section 382 of the tax code was created by Congress in 1986 to end what it considered an abuse of the tax system: companies sheltering their profits from taxation by acquiring shell companies whose only real value was the losses on their books. The firms would then use the acquired company's losses to offset their gains and avoid paying taxes." and "The Treasury notice suddenly made it much more attractive to acquire distressed banks, and Wells Fargo, which had been an earlier suitor for Wachovia, made a new and ultimately successful play to take it over. The Jones Day law firm said the tax change, which some analysts soon dubbed "the Wells Fargo Ruling," could be worth about $25 billion for Wells Fargo. Wells Fargo declined to comment for this article. The tax world, meanwhile, was rushing to figure out the full impact of the notice and who was responsible for the change. Jones Day released a widely circulated commentary that concluded that the change could cost taxpayers about $140 billion. Robert L. Willens, a prominent corporate tax expert in New York City, said the price is more likely to be $105 billion to $110 billion. Over the next month, two more bank mergers took place with the benefit of the new tax guidance. PNC, which took over National City, saved about $5.1 billion from the modification, about the total amount that it spent to acquire the bank, Willens said. Banco Santander, which took over Sovereign Bancorp, netted an extra $2 billion because of the change, he said. A spokesman for PNC said Willens's estimate was too high but declined to provide an alternate one; Santander declined to comment." and finally "Grassley and Sen. Charles E. Schumer (D-N.Y.) have publicly expressed concerns about the notice but have so far avoided saying that it is illegal. "Congress wants to help," Grassley said. "We also have a responsibility to make sure power isn't abused and that the sensibilities of Main Street aren't left in the dust as Treasury works to inject remedies into the financial system." In the end, windfall or not, this is another wink and nod controversy. If you want the strong to take over the weak and make progress cleaning up this mess, end arounds like this are only beginning. But all together now, I'm shocked! from the article:

“Section 382 of the tax code was created by Congress in 1986 to end what it considered an abuse of the tax system: companies sheltering their profits from taxation by acquiring shell companies whose only real value was the losses on their books. The firms would then use the acquired company’s losses to offset their gains and avoid paying taxes.”

and

“The Treasury notice suddenly made it much more attractive to acquire distressed banks, and Wells Fargo, which had been an earlier suitor for Wachovia, made a new and ultimately successful play to take it over.

The Jones Day law firm said the tax change, which some analysts soon dubbed “the Wells Fargo Ruling,” could be worth about $25 billion for Wells Fargo. Wells Fargo declined to comment for this article.

The tax world, meanwhile, was rushing to figure out the full impact of the notice and who was responsible for the change.

Jones Day released a widely circulated commentary that concluded that the change could cost taxpayers about $140 billion. Robert L. Willens, a prominent corporate tax expert in New York City, said the price is more likely to be $105 billion to $110 billion.

Over the next month, two more bank mergers took place with the benefit of the new tax guidance. PNC, which took over National City, saved about $5.1 billion from the modification, about the total amount that it spent to acquire the bank, Willens said. Banco Santander, which took over Sovereign Bancorp, netted an extra $2 billion because of the change, he said. A spokesman for PNC said Willens’s estimate was too high but declined to provide an alternate one; Santander declined to comment.”

and finally

“Grassley and Sen. Charles E. Schumer (D-N.Y.) have publicly expressed concerns about the notice but have so far avoided saying that it is illegal. “Congress wants to help,” Grassley said. “We also have a responsibility to make sure power isn’t abused and that the sensibilities of Main Street aren’t left in the dust as Treasury works to inject remedies into the financial system.”

In the end, windfall or not, this is another wink and nod controversy. If you want the strong to take over the weak and make progress cleaning up this mess, end arounds like this are only beginning. But all together now, I’m shocked!

]]> By: danvta http://www.ritholtz.com/blog/2008/11/treasury-dept-illegally-repeals-tax-law/comment-page-1/#comment-125368 danvta Mon, 10 Nov 2008 20:00:43 +0000 http://www.ritholtz.com/blog/?p=8775#comment-125368 This loophole was the only reason Wells made its bid on Wachovia. I wonder how this affects Citi's specific performance case against Wachovia? I've heard the argument that the Wells deal is better for taxpayers than the Citi deal because the FDIC wouldn't guarantee any of the Wachovia debt, but if Wells' bid is predicated on paying $25 billion less in taxes, it seems like taxpayers are still on the hook. I think Citi got screwed... This loophole was the only reason Wells made its bid on Wachovia. I wonder how this affects Citi’s specific performance case against Wachovia? I’ve heard the argument that the Wells deal is better for taxpayers than the Citi deal because the FDIC wouldn’t guarantee any of the Wachovia debt, but if Wells’ bid is predicated on paying $25 billion less in taxes, it seems like taxpayers are still on the hook. I think Citi got screwed…

]]> By: batmando http://www.ritholtz.com/blog/2008/11/treasury-dept-illegally-repeals-tax-law/comment-page-1/#comment-125360 batmando Mon, 10 Nov 2008 19:30:13 +0000 http://www.ritholtz.com/blog/?p=8775#comment-125360 Wholesale looting by the ancien regime Wholesale looting by the ancien regime

]]> By: dogjawbull http://www.ritholtz.com/blog/2008/11/treasury-dept-illegally-repeals-tax-law/comment-page-1/#comment-125327 dogjawbull Mon, 10 Nov 2008 18:09:16 +0000 http://www.ritholtz.com/blog/?p=8775#comment-125327 Naomi Klein, people. Another Shock opportunity to steal money from the taxpayers. Or in this case from future taxpayers. These people are so frikkin' dirty! I'd add that Reuben Jeffery III, who is on the board overseeing the free flow of tax bucks from the Treasury, also was the executive director of Paul Bremmer's Provisional Coalition Authority in Iraq....you know, the guy that gave out billions in cash, and tens of billions in contracts for which there is no accounting? Right. That Reuben Jeffery III. This is the most corrupt government we have ever had the pleasure of getting ass f*cked by. Scott in Chicago Naomi Klein, people. Another Shock opportunity to steal money from the taxpayers. Or in this case from future taxpayers. These people are so frikkin’ dirty! I’d add that Reuben Jeffery III, who is on the board overseeing the free flow of tax bucks from the Treasury, also was the executive director of Paul Bremmer’s Provisional Coalition Authority in Iraq….you know, the guy that gave out billions in cash, and tens of billions in contracts for which there is no accounting? Right. That Reuben Jeffery III. This is the most corrupt government we have ever had the pleasure of getting ass f*cked by.

Scott in Chicago

]]> By: Winston Munn http://www.ritholtz.com/blog/2008/11/treasury-dept-illegally-repeals-tax-law/comment-page-1/#comment-125326 Winston Munn Mon, 10 Nov 2008 18:06:30 +0000 http://www.ritholtz.com/blog/?p=8775#comment-125326 In a related question, why would Bloomberg need to file a Freedom of Information Act-based lawsuit to find out what collateral the Federal Reserve is accepting for the $1.5 Trillion in loans they have made so far that are backed by the taxpayers? Could there be something there to hide? http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKr.oY2YKc2g In a related question, why would Bloomberg need to file a Freedom of Information Act-based lawsuit to find out what collateral the Federal Reserve is accepting for the $1.5 Trillion in loans they have made so far that are backed by the taxpayers? Could there be something there to hide?

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKr.oY2YKc2g

]]>