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Should banks being fined for federal violations be allowed to deduct fines on taxes?
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A Gazette guest column published Sunday expresses outrage that big banks, some of which have been fined for violating federal regulations and mishandling mortgages, are being allowed to take a tax deduction for those fines.
“Bank of America and CitiGroup recently negotiated a settlement in a multibillion dollar lawsuit to settle charges that it mismanaged mortgages and knowingly violated regulatory practices, resulting in the wrongful foreclosure on hundreds of thousands of American families,” reads a portion of the column by Sonia Ashe of Des Moines, an advocate with the Iowa Public Interest Research Group.
“Bank of America agreed to an $11.6 billion negotiated settlement to Fannie Mae, settling charges that its Countrywide Financial subsidiary sold the agency mortgages obtained with improper underwriting and other practices. Ten banks, including Bank of America, separately agreed to pay $8.5 billion in direct and other benefits to homeowners for knowingly violating regulatory procedures and wrongfully foreclosing on hundreds of thousands of homeowners who should have been allowed to stay in their homes.
“Many have argued that the settlements levied on big banks like BOA and Citigroup were too lenient, but what really turns my stomach is that these bank giants can, and most likely will, claim these settlements as a deduction on their taxes. And when that happens, taxpayers like you and me and the homeowners that BOA wrongfully kicked out of their homes will be left to pick up the tab.
“Let that sink in for a second. That means big banks that essentially destroyed the hundreds of thousands of homeowners’ hopes, and sent the United States into an economic spiral by using illegal practices to bolster their profits, can write-off their settlement in resulting court cases as a cost of doing business.”
What do you think of that notion? Should big banks being fined for violating federal regulations and mishandling mortgages be allowed to take a tax deduction?
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The community reinvestment act.
This is what happens when the power of govt is used to direct any segment of the economy.
Next up? Crushing student loan debt.
“I’m from the government, and I’m here to help you”
The 10 most destructive words in the English language.
The fines are an operational cost of doing business. That is the tax code as written and enacted for the forth branch of govt. The evil ‘ doing business’ branch.
Oh wait……….I guess congress writes the tax code, or ‘loop holes; as Obama refers to the tax code written by congress and enacted by the President and enforced by the President.
Obama could just refuse to allow the deduction. He is not bound by the laws or constitution of the Nation. He rewrote laws concerning bound holders in debt restructuring from the oval office, this should be a piece of cake
If a person gets a speeding ticket or any other court imposed fine, they cannot deduct it on their taxes. Since we have been told that “corporations are like people” why should they be treated any differently?
Just another example of whom runs this country!
No, I don’t think they should be able to take a deduction. But it may happen. Note that as a result of the “savings and loan crisis” ( about 1989 – 1993 ) around a thousand participants were convicted and jailed. How many involved in the 2008 near financial melt-down suffered the same fate ? Near none — to big to fail = too big to jail? That’s hardly encouraging.
No, why should they be able to. Can citizens deduct their fines on their taxes. Not frickin hardly, why should corp America be able to do it?
A fine is not the cost of doing business; it is the cost of doing business illegally. You can be certain their many floors of attorneys advised them before they started going down the wrong path that – if they end up in court, any fine won’t affect the back, since they can write it off. Indeed they shouldn’t be allowed to deduct the fines, but you and I would pay for it either way. Through our taxes or when the banks raise their rates to cover the fine. This is why there is no compelling incentive for them to play it straight. They’re covered no matter what they do.
Either way the cost will end up on the consumer’s tab. Either through lost tax revenue or increased fees. There needs to be an alternative.
Besides, in general doing business illegally and getting fined for doesn’t always equate to a net loss for a company. Insider trading can still be lucrative if you can handle the tarnished reputation (assuming that it tarnished your reputation).