Maybe it’s a mistake. Did Timmy have time to run their return on TurboTax?
Well, at least it will make the results of the TARP program look better on paper if it drives up Citi’s stock price by inflating their financial results. That’s a plus, right?
I guess raising the credit card rates to 26% and free money from Ben was not enough to push Citi over its capital objectives in time for bonus season. We’ll all have to really tighten our belts for this one.
Change you can believe in.
Citigroup gains massive tax break in deal with IRS
By Binyamin Appelbaum
Tuesday, December 15, 2009; 8:05 PM
The federal government quietly agreed to forgo billions of dollars in potential tax payments from Citigroup as part of the deal announced this week to wean the company from the massive taxpayer bailout that helped it survive the financial crisis.
The Internal Revenue Service on Friday issued an exception to longstanding tax rules for the benefit of Citigroup and the few other companies partially owned by the government. As a result, Citigroup will be allowed to retain $38 billion in tax breaks that otherwise would decline in value when the government sells its stake to private investors.
While the Obama administration has said taxpayers likely will profit from the sale of the Citigroup shares, accounting experts said the lost tax revenue could easily outstrip those profits.
The IRS, an arm of the Treasury Department, has changed a number of rules during the financial crisis to reduce the tax burden on financial firms. The rule changed Friday also was altered last fall by the Bush administration to encourage mergers, letting Wells Fargo cut billions from its tax bill by buying the ailing bank Wachovia.
“The government is consciously forfeiting future tax revenues. It’s another form of assistance, maybe not as obvious as direct assistance but certainly another form,” said Robert Willens, an expert on tax accounting who runs a firm of the same name. “I’ve been doing taxes for almost 40 years and I’ve never seen anything like this where the IRS and Treasury acted unilaterally on so many fronts.”
Treasury officials said the most recent change was part of a broader decision initially made last year to shelter companies that accepted federal aid under the Troubled Assets Relief Program from the normal consequences of such an investment. Officials also said that the ruling benefited taxpayers because it made shares in Citigroup more valuable and asserted that without the ruling, Citigroup could not have repaid the government at this time. (Thank God. Just in time for prime bonus season – Jesse)
“This guidance is the part of the administration’s orderly exit from TARP,” said Treasury spokeswoman Nayyera Haq. “The guidance prevents the devaluing of common stock Treasury holds in TARP recipients. As a result, Treasury can receive a higher price for this stock, which will benefit the financial system and taxpayers.” (George Orwell would have fun with this one. Let’s give them a lot more money, so that when they give some back it will make our government program look better – Jesse)
Congress, concerned that the Treasury was rewriting tax laws, passed legislation earlier this year reversing the ruling that benefited Wells Fargo and restricting the ability of the IRS to make further changes. A Democratic aide to the Senate Finance Committee, which oversees federal tax policy, said the Obama administration had the legal authority to issue the new exception, but Republican aides to the committee said they were reviewing the issue.
A senior Republican staffer also questioned the government’s rationale. “You’re manipulating tax rules so that the market value of the stock is higher than it would be under current law,” said the aide, speaking on condition of anonymity. “It inflates the returns that they’re showing from TARP and that looks good for them.” (And a nice accomplishment for Timmy’s year end performance review – Jesse)
Read the rest here.
I was driving by Loads Bankinsfelds house the other day and damn that top photo of OB looks just like the drive way lamp holder…umm? Back ground sign and all!
BTW Timmaha with out the suit and a bad hair cut, is really the sham]wow guy don’t you think, didn’t ya know?
Thanks as aways for your hard work Jesse, from the heart!
Oh you are wicked!
It is absolutely insane what we do for bankers in this country. Has anyone in our government ever read the Constitution? Does anyone stand up for the founding values of this country anymore? I just wish there was something more than just blogging I could do to stop this madness. I guess for now the only thing we can do is try to continue raising the awareness of the general public with our blogs. Great post. Keep fighting the good fight. Here’s a great quote and a video every AMERICAN needs to watch.
“The inability of the Colonists to get power to issue their own money permanently out of the hands of George III and the international bankers was the PRIME reason for the Revolutionary War.”
I’m still glad Obama was elected. It’s always nicer to be screwed by someone who’s charming.
The banks are insolvent. The only way for them to appear solvent is if the government shovels money at them and allows them to cook their books, charge exorbitant fees from the hides of their customers, and re-engage in reflating bubbles. This is the plan and the Obama Administration has been remarkably consistent in sticking to it and sticking it to us.
As a recently let go Big 4 Tax Accountant I’ll be sure to let my former Big 4 coworkers know how I feel about this one (FYI – Not happy). Oh, and I was still at the Big 4 when the last similar tax break (Code Section 382) was given to some bank and my coworkers were quite excited about that one (while I felt kind of dirty).
Full disclosure – I’m enjoying my corporate severance at the beach so I can’t complain too much!!!
PS – I do find it funny that one of the companies often discussed on this blog offered me the biggest salary since I’ve been let go!! Ooops, on them. I’ll take what they offer.
“IRS and Treasury acted unilaterally on so many fronts” …. Unilaterally, along with DOJ, FBI, FTC, Congress an all them other rotten inbred hillbilly bankers and lawyers that disgrace the U.S. senate. I used to blame the Bush Coup, but now with Obama obviously within the very same circle of conspiracy, it’s getting just a wee bit hard to tell who isn’t in on this coup — besides taxpayers.
Essentially, instead of having a bank holiday/Swedish-solution and attempting to find an honest solution for our systemic collapse, a corrupt group of shadow-banking people came up with a creative government-wide program to re-invent global finance, which has included buying off every branch of our American government.
The Obama change that some people didn’t anticipate is the blitzkrieg shift into American fascism.
‘“IRS and Treasury acted unilaterally on so many fronts” …. Unilaterally, along with DOJ, FBI, FTC, Congress…
It’s really multilateral collusion, especially when you add in the SEC, the CFTC, the FTC, etc. It’s multilateral (gang) rape, and the American people are unilaterally screwed.
This is a massive cover up! Let’s get out the pitchforks and torches!
But but didn’t Obama just said that he was not elected to benefit some wall-street fat bankers? He sounded sincere to me. The puppet in chief saga continuous.
Fire this guy already!
Jesse, do you need a new waitress for the cafe? I can pick up French very quickly. Time to emigrate.
I agree that this is an outrageous action, but unless we assume that Citi will be able to make $100+ billion of real income (net of any future losses) to offset these losses, (And given their track record why should we?), the dollar cost of this giveaway may not amount to much.
As I recall, Treasury did not have the legal or constitutional authority to change the tax laws that allowed WFC to buy Wachovia. In short, what Treasury did was illegal.
Months later, in Jan-Feb 09, Congress noted the illegality of the Treasuries tampering with tax laws, did reverse the Treasury’s alteration of the tax laws, but did not prosecute the Treasury for tampering with those laws.
So, what does the IRS go out and do at year-end? It goes out and issues another exception to tax laws to benefit another big bank, flagrantly flaunting their disregard of the law.
What was the Treasuries justification for disregarding these tax laws? The exception was needed because “without the ruling, Citigroup could not have repaid the govt at this time.” The Treasury mandate was to get Citigroup off of TARP before year-end, so Citi could dole out these so-called “retention” bonuses to their dark and murky predatory “talent pools.”
In short, this is another govt racketeering scheme to reward the criminal activity that bankrupted Citi in the first place.
Truman once said, “if you want a friend, get a dog.” Taxpayers certainly have no friend in the Treasury or govt today. Insofar as these elected officials continue to serve the big banks needs over that of their constituents, almost every single elected official is acting in a breach of their civic duties and eligible for impeachment.
I believe that John Bougearel has his facts correct on this one.
It is particularly egregious of the Treasury / IRS to come back and do what the Congress previously reversed.
Does the Congress have the courage to call a hearing and take Timmy to task on this? Will they reverse it before they recess?
Or will we have to wait until after the mid term elections for a new Congress to begin its hearings, and hopefully impeachment proceeding against Tim.
Btw and just to nitpick that is a great quote cited by R. Hammer but Franklin never said it tht way I think.
The essence of it is correct, as Franklin had said that England’s attempts to control the currency of the colonials was one of the reasons for the revolution. The King would not allow the colonies to issue their own paper currency, or to bring in non-English gold and silver. England wished to maintain a monetary monopoly in America.
Funny though since Spanish pieces of eight were in wide use anyway. Was it defiance, or something more common after the revolution. I’ll have to read up on that one.
Gee, and Matt Tabbai was wrong how? The only thing I would disagree with is the term “sell out” since that would mean that Obama shifted his position after the election. As Ryan Lyzza documents in New Yorker, he accommodates himself to the establishment and his intellectual basket is filled with the ideas of Hyde Park and the University of Chicago, and during the campaign it was clear that he had linked up with Robert Rubin and his economic theory of “Economic Growth through Creative Finance.”
CITIBANK continues by the way to make one bad decision to another so their executives are simply looting from both the tax payers and shareholders when they pay out cash tp themselves in the form of bonuses from their mythical profits.
It will be interesting what will happen after the 2010 election as political survival has a way of concentrating a politician’s mind and providing a backbone of the survival instinct. Certainly in Congress, the knives will be out for Geithner and Summers and what good will they be able to do for either Obama or the banks at that point. Their utility will be at an end.
Thank you Jesse, Ives, and other econ wizards for relentlessly stripping away the fig leaves of pretense from this balantly self-dealing kleptocracy.
Little by little you all are exposing and undermining the foundation of the fortress of fraud behind which they smugly cower. I have no doubt that soon that wall of shame will crumble and topple as unexpectedly and rapidly as the Berlin wall tumbled and the USSR imploded. I do hope you are prepared to boldly assume leadership at that time.
So this is what fascism smells like in the morning.
Oligarchy we can believe in.
Wow. I was watching this video – http://tiny.cc/TaJx9 – and it said that the government will be making $14 billion after Citi repays, and I thought it was good news until reading that the govt is giving another $30 billion in tax breaks to citi? I like John’s points too, think there’s something very fishy going on.
I think Citigroup deserves the $38 billion tax break.
They hire the right puppets, pay them well, and the puppets put on a show so good that the dumb ass scamericans just keep on coming back for more, and more, and more … it is such an elegant and convincing illusionary farce that even the marks who are supposedly the best and brightest unwaveringly and passionately participate in the voo doo science head fuck economics game at the top as if they were eating ice cream pies basted in fine Swiss chocolate … and then, when they are fucked — again, and again, and again — do they get pissed off and get out and Berlusconi any of those gangster pricks who have deceived them? Hell no they don’t, they simply start talking about; congressional courage, mid term elections, their now piece of shit constitution, what their dumb ass racist founding fathers would so, no legal or constitutional authority, the FED is a big bully, maybe their is something fishy going on, etc., etc., etc. …
Kudos to Citigroup rain down sorrow on the chumps.
Deception is the strongest political force on the planet.