We learn from WaPo that the Treasury Department slipped through a $140 billion tax windfall to US banks — in theory repealing 1986 legislation, passed by Congress and signed by President Reagan.
The likely illegal change was aggressively lobbied for by banking officials, who sought to take advantage of the market turmoil and credit crisis.This is an ongoing issue we have witnessed in every prior bailout: Opportunism knows no sense of decency.
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 “They basically repealed a 22-year-old law that Congress passed as a backdoor way of providing aid to banks.”
This should come as no surprise to long-time watchers of the Bush White House. From their extra-legal signing statements (they took them seriously, but legal scholars said they had no legal standing) to the abuses at the Justice Department, there was very little respect ever paid to the US Constitution.
How typical of the rogue elements within the outgoing administration.
Look for litigation about this shortly . . .
Originally published on October 10, 2008 at The Big Picture blog and reproduced here with the author’s permission.