Congress really is just for show
Posted on November 25th, 2008 at 10:59am by bile Tags: Andrew DeSouza, banking, Bloomberg, Bob Higgs, Charlotte, Columbia, Columbia University Business School, Congress, David Tobin, Department of the Treasury, FDIC, Federal Reserve System, investment bank, Lehman Brothers, Mission Capital Advisors LLC, New York, North Carolina, Robert Willens, USD, Wachovia Corp., Wells Fargo & Co.Writes Bob Higgs:
My source is Bloomberg.Requiring the Fed to disclose loan recipients might set off panic, said David Tobin, principal of New York-based loan-sale consultants and investment bank Mission Capital Advisors LLC.
“If you mark to market today, the banking system is bankrupt,” Tobin said. “So what do you do? You try to keep it going as best you can.”
I believe he said “the banking system is bankrupt.” That seems like an honest statement. And then he said “you try to keep it going.” Pretty cool, eh. Zombie banking system. Keep it going.
Some of the bailout assistance could come from tax breaks in the future. The Treasury Department changed the tax code on Sept. 30 to allow banks to expand the deductions on the losses banks they were buying, according to Robert Willens, a former Lehman Brothers tax and accounting analyst who teaches at Columbia University Business School in New York.
Wells Fargo & Co., which is buying Charlotte, North Carolina-based Wachovia Corp., will be able to deduct $22 billion, Willens said. Adding in other banks, the code change will cost $29 billion, he said.
“The rule is now popularly known among tax lawyers as the ‘Wells Fargo Notice,’” Willens said.
The regulation was changed to make it easier for healthy banks to buy troubled ones, said Treasury Department spokesman Andrew DeSouza.
Note: the Treasury changed the law. The pretense that Congress makes the laws, with the president’s assent, has apparently been abandoned as unnecessary in a crisis. Besides, under the present emergency regime, the Treasury is the government, with assistance from the Fed and the FDIC. All the rest is mere window dressing.
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