Tuesday, December 15, 2009
The Hits Just Keep Coming - One Set of Rules for You Another for the Banks
In the latest abomination the Obama administration has changed tax law for Citibank. Not to belabor the technicalities, but US tax law generally limits a taxpayer's ability to utilize operating losses to offset prior or future income. The limitation is operational where there is a change in control. The disposal of the federal government stake of approximately 34 percent of Citi combined with the equity offering runs into this problem. But as if by a king's decree the Obama administration is pretending as though the limitation doesn't exist in Citi's case. The impact is only $38 billion, yes $38 BILLION. This is beyond obscene, I think it's illegal. Now mind you I just learned this so I need to investigate it further, but I can't imagine how else it could work (I am a tax attorney). Essentially, US taxpayers have just bailed out Citi to the tune of another $38 BILLION, and no one's the wiser. Are you kidding me. This is beyond the pale.
Posted by iuubob at 9:21 PM