It’s not about a salary it’s all about reality:
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.
But, you know, Taibbi was wrong about Rubin. And he may have said fuck.
*** Update ***
Marci Wheeler tweets- “Wonder if he got a CBO score first?”
*** Update #2 ***
Commenter J. Michael Neal says I don’t know my ass from a hole in the ground, and after reading his comment, I tend to agree with him. If he is right, there is no reason to be worked up about this. I can’t think about the bankers rationally anymore and need to wait an hour or two after I read something before I post.
Comrade Jake
Yeah that one’s gonna leave a mark.
Kryptik
So…who’s making the noise?
(Sorry, John, had to finish the first line)
Notorious P.A.T.
This is. . . congress’s fault?
General Winfield Stuck
The problem isn’t Rubin. he and those like him are just the Ringmasters. The disease is the beast built from conservative economic theory and the deregulation that created it.
And now it seems no one knows how to kill it, or are afraid to try, lest the world economy gets kilt with it.
So instead, they are continuing to feed it in hopes it will become our friend again, and not et us whole.
I am not hopeful.
El Cid
I’m shocked. I really believed all those people who said we’d be making more money off these investments than we gave out. I also believe that I don’t need doctors no more and I’ll just take these magic colloidal silver tablets.
Joe Beese
Rage Against The Machine are going to have a field day with this.
Graeme
NO DEAL! What brazen bullshit.
Ed Drone
Maybe we should all withhold taxes in the same percentage of our earnings, eh?
Ed
dr. bloor
@Notorious P.A.T.:
Perusing the internets, I believe today is Rahm Emmanuel’s day to bend over for the paddling.
arguingwithsignposts
I guess that wasn’t so quiet after all, eh?
Why do they keep giving these f**kers the rope?
J.W. Hamner
It seems they’re basically relaxing the tax rules for crass political purposes… i.e. so the money returned to tax payers looks larger… but I’m not sure how this fits into Taibbi’s hypothesis. I don’t see how this enriches bankers at the expense of the proletariat. EDIT: Beyond the original bailout that is.
Karmakin
Indeed. Where do you think that money is going? It will serve to prop up stock and real estate prices, which is the real gauge of the economy for a significant and politically motivated slice of the electorate.
Don’t ignore the fact that the financial industry has the entire country by the balls.
arguingwithsignposts
@Joe Beese:
You rang.
Wile E. Quixote
Could someone please explain to me how the Obama administration is any better than the Bush administration, or a putative McCain administration would have been, when it comes to sucking off the banksters? C’mon, tell me how this is the “change” that everyone was voting for last year. I can’t wait to hear that. And this isn’t Congress’s fault, this is an IRS administrative rule change that is being driven by the Obama administration, so don’t start whining about Harry Reid or Joe Lieberman.
sgwhiteinfla
Just wondering if you had read Ezra Klein’s criticism of Taibbi’s story.
http://voices.washingtonpost.com/ezra-klein/2009/12/is_robert_rubin_more_important.html#more
You know I get people defending Taibbi. I usually like his stuff too. But he is human like everybody else and he can get shit wrong too. And the thing of it is, the premise of his story can be wrong AND the Obama administration could be too beholden to Wall Street. Those two things aren’t mutually exclusive. Ezra, to me, does a great job of making that point. But it seems like either you are for Taibbi, or you are a Obamabot for some folks.
jwb
@Wile E. Quixote: It may just be me, but I very much doubt that you’ll get many folks defending the administration on the banking stuff. But I will say that if I was going to blame someone besides Obama it would be Larry Summers, who I think is pure poison. And, yes, Obama bears full responsibility for choosing to listen to the man.
John O
@sgwhiteinfla:
Ezra indeed makes a compelling case.
I still feel completely ripped off, and there is no shortage of bonus-level folks at my company taking bonuses while we lay off near 1/3 of our people (half next year) and lose money who haven’t had to withhold their anger with me for suggesting all we need to do is change the word from “bonus” to “entitlement” and I’ll be fine with it. (With a smirk on my face, and disgust in my voice to boot.)
So far, not one has dared escalate or defend. (I’m not bonus level.)
Credit card companies and banks borrowing money at near 0% while increasing fees and interest rates, health care companies abandoning customers and jacking up rates, telecoms having us all by the proverbial nuts…I don’t see how anyone looks at things broadly and doesn’t feel stolen from.
Redhand
Could someone please explain to me how the Obama administration is any better than the Bush administration, or a putative McCain administration would have been, when it comes to sucking off the banksters? C’mon, tell me how this is the “change” that everyone was voting for last year.
It’s actually worse, because Obama promised to be different. At this point I am so disillusioned, I would have preferred Hillary won the nomination. Then, when I voted for her holding my nose, I would at least have known what I was getting. With this guy it’s a pack of fucking lies and glib equivocations.
There isn’t a single area: war, restoration of the separation of powers and rule of law in the executive; economic policy; etc. where Obama hasn’t proved to be a colossal disappointment. “Change you can believe in” my ass.
Max
@John O: I’m a bonus level employee, at a management level. My annual bonuses are based on performance goals, that at full weight equal 20% of my base salary. My company did not give bonuses in 2009 (for fy 2008) and we did not receive any raises. The company did lay off 20% of its work force over the last 18 months, and while some of that was unnecessary overhead, the field is running very lean.
As a consideration for the added work, lack of wage increase, and in order to stay competitive in the industry to avoid a raid of top talent, my annual bonus has been increased to 25% of my base salary.
I have busted my ass to bring my division in-line with the goals set for it, in a very challenging environment. The bonus was a part of the compensation package that the company lured me with and I am paid mid-range to what I could get across the street. I don’t feel the need to defend receipt of this bonus, but I understand your frustration.
Fortunately, all employees are entitled to bonuses at my company, the % to your base salary depends on your position.
J. Michael Neal
Once again, we’re getting a whole lot of outrage based upon not very much understanding. The important information is all buried at the bottom of the article.
This is the sequence of events:
1) Citigroup loses $38 billion. Under normal circumstances, they could use this loss as a tax carryforward and deduct it against future earnings. This is routine, and is exactly what is intended under the tax code.
2) The US government stepped in and bought 34% of the company to prevent it from going bankrupt. This provided much needed capital.
3) The US government wants to get its money back now that the crisis is over. In order to do so, it wants someone else to provide replacement capital so that it’s money is no longer needed.
4) For some good reasons, the government does not want investors to buy a company just to pick up its outstanding carryforwards. Therefore, if a company changes hands, the acquiring company is not allowed to use any existing carryforwards for its own purposes. However, those carryforwards remain on the balance sheet of the company that was acquired, and can be used against its own future profits.
5) If the government sells its 34% stake in Citigroup, that technically counts as a change of ownership for tax code purposes. Because of some quirks, this particular ownership change would eliminate Citigroup’s carryforward altogether, because it would be considered to have purchased itself.
6) That makes no logical sense. It doesn’t meet the purposes for why the tax rule is in place. The nature of the transaction does not meet the spirit of what was meant by a change in ownership. It’s a stupid result. There isn’t any reason that the carryforward ought to disappear.
7) The administration is bending the rules with this ruling, but staying well within their spirit. Carryforwards aren’t supposed to just disappear; they are supposed to still be available to the company that suffered the losses. All that this ruling does is to declare that Citigroup is, in fact, Citigroup, that it lost $38 billion in the recent past, and that it is entitled to deduct its own losses against its own future profits if it has any during the 20 years after those losses, just like any other company.
The comparison to the Bush administration’s ruling to allow Wells Fargo to deduct Wachovia’s losses from its own profits is a complete red herring. In that case, you really did have one company buy another company. That’s exactly the scenario that the rule in the tax code was meant to prevent. Hank Paulson flagrantly broke both thew spirit and the letter of the law in allowing that deduction.
That’s not what is going on here. As is often the case, things get weird when the government is involved in the ownership of a private company. The treasury isn’t creating a giant loophole for its cronies. It is making a ruling that may or may not break the letter of the tax code (I haven’t looked at the ruling or the specific regulation in enough detail to be sure, and I’m definitely not trusting the Post to be able to provide a correct answer), but that leads to a result that is consistent with what is supposed to happen.
And, much like you, John, he doesn’t know enough about the subject to have any idea what is actually happening.
jcricket
Every time a corporation pays taxes, baby Jesus dies a little on the inside.
Midnight Marauder
@sgwhiteinfla:
I completely concur with this assessment. But wow, when I saw this, it was like a swift, stealthy blow right to the soul.
And this is just…wow. I will be curious to see how this latest installment of Obama and The Banksters unravels.
mr. whipple
The federal government quietly agreed to forgo billions of dollars in potential tax payments from Citigroup”
Um, don’t we own some of citi? So, this would be like the gvt taxing itself?
on edit: I see JMN covered it.
Brian J
I don’t know if this is something that will hit them directly or indirectly, but isn’t this just one more reason why we need a financial transaction tax? It’ll provide the government with much needed revenue while not, it seems, having the same dead weight loss problems as other taxes.
I’ve often said that if the Obama administration needs to try address concerns about the deficit and also try to beat back populist anger towards Wall Street, they should propose a financial transaction tax. Some small spending cuts, to take place a few years down the line, could be proposed alongside this tax, but that’s not important. The administration needs to do nothing more than pitch this as a way to have Wall Street pay us back after saving their asses. Then he can dare the Republicans to vote against it.
mcd410x
Here’s Mary Landrieu’s take on health care. (This thread has an “assholes” tag).
This health care debate makes me want to vomit.
jcricket
@Redhand: God you fucking Obama supporters are fucking idiots.
I supported Hillary (no nose-holding). I also supported Obama (no nose-holding). But I had no illusions about either.
I share your disappointment, in general, about how little Democrats are doing to reform healthcare, the banking sector, etc.
But this idea that Obama was some liberal shining knight (MUP, for those that remember) and Hillary some horrible compromising DLC monster was just your projection.
Anya
John, I don’t understand what this new development has to do with Taibbi’s six degrees of separation from Rubin theory. Those who challenged Taibbi’s hypotheses actually made the case that these loose links that Taibbi is focusing on is a problem and it overshadows the actual problem.
General Winfield Stuck
Query.
When the bailout monies are paid back, is it like they never happened? Is is still a big give away to the banks and bankers?
Max
@General Winfield Stuck: Sadly, if it doesn’t happen in the first year of Obama’s presidency, it doesn’t count. As we learned on a previous thread from a blogger who shall not be named.
J. Michael Neal
@General Winfield Stuck:
No. The government gets interest on the money. In addition, the government received warrants on the companies’ common stock. In most cases, the banks are also paying to buy these back. There are other bailout programs, and some deadbeat banks (plus AIG) that can’t pay back the money. However, in any case where the money is being repaid, the government has made a rather substantial profit on the deal. That’s one of the things that makes the outrage so out of place.
dr. bloor
@jcricket:
A perfect bookend criticism to this.
The circle is complete.
madmommy
@mcd410x:
Landrieu is my Senator, and the worst sort of DINO. She’s a so-called Democrat repping a state that is solidly GOP, so I guess that she thinks she’s gotta tack as close to the right as possible to keep her seat. It never ceases to amaze me that people will continually vote against their own best interests. Louisiana is near the bottom nationwide in terms of every metric measuring healthcare and wellbeing, yet they continue to turn out to hang with the teabaggers.
Continually banging my head against my desk over this stuff is beginning to affect my mental capacities.
Martin
@Redhand:
Yeah, read JMN who is exactly correct. You wanna come back to this at a more appropriate time?
Can we please try a little less hard to be sorely disappointed? I know it’s hard, but maybe we could put our outrage back in its holster?
gwangung
This is, on the surface, a reason why this move isn’t as outrageous as it seems. Can anyone deal with this, and not just ignore it? If I’m going to be outraged, I’d rather it be based on knowledge and not just ignorance of what happened.
mr. whipple
@J. Michael Neal:
“However, in any case where the money is being repaid, the government has made a rather substantial profit on the deal. That’s one of the things that makes the outrage so out of place.”
Is it possible to speculate, in the end, what the net loss/gain will be? (And when will be the end?)
General Winfield Stuck
@J. Michael Neal:
So Obama didn’t sell out to the bankers. Jeepers, imagine that/ Of course no real reforms have been passed, yet.
We must schedule this poutrage in with all the others, sometime before it actually happens, so not to miss out on all the fun with sound and fury, signifying precisely nothing. 3 to 8 more years of this shit may rival Bush angst, though the end result should be better, but not the middle innings.
And when it’s over, Obama will be falsely accused of stealing the P’s off all the WH keyboards. All of it, like clockwork.
J. Michael Neal
@mr. whipple:
Sort of. Since we only own 34% of Citigroup, 34% of the taxes would be imposed upon ourselves. However, the other owners would have a valid reason for thinking that they were being treated unfairly. They would be taxed as if they were a new entity buying Citigroup as part of an overall ownership change, when, in fact, all they did was buy your average, ordinary shares of C. When you or I buy shares in a company, that doesn’t constitute a change of ownership in the sense of triggering this tax provision. However, if you own shares of a company that the government buys a huge chunk of, all of a sudden you lose your share of the carryforward. That’s stupid. If you don’t like the carryforward provisions, fine, work to change the tax code, though I disagree with you. Why these owners should lose it arbitrarily, though, eludes me.
Dave C
@mr. whipple:
Yes, the final profit will be. . .a buck fitty.
J. Michael Neal
@mr. whipple:
They’re always coming up with estimates, but they are also changing constantly. Last week, the Treasury lowered its estimate of how much TARP would actually end up costing us by $154 billion. I think that brings the overall estimated cost down to about $100-$150 billion, though I don’t think that that includes the money thrown at AIG. It does include the bailouts of GM and Chrysler, though.
mr. whipple
@Dave C:
LoL. Now I have to clean the beer off my screen.
J. Michael Neal
I think the lesson here should be, “Don’t trust what you read in the Washington Post.” I thought we’d learned that already, but I guess not.
gwangung
Heh. I do that all the time. And it shows you’re a functional human being with human-level intelligence, unlike idealogues like your typical wingnut, who’d rather die than admit they were wrong.
(Too, this is interesting because I might have learned something here).
Morbo
@General Winfield Stuck: It is if they didn’t pay taxes because of the portion of them that the government owned for the interim.
dan
@mr. whipple: Yeah, I’m sorry to see so many agree with Ezra here. He’s wrong. Kevin Drum took his position down. It’s just a cop out to say that the Rubin proteges are better at running institutions and passing bills because they’ve done it already, so it is okay that we keep asking them to do it. It is possible to have a principled objection to the policies of Summers/Geithner and not, at the same time, get relegated to the kids table. The fact that we are going down the Rubin road is a real policy choice, and the choice of a specific result, not just “smart government” seeking the best of several options.
mr. whipple
You are a stand up dood. Cudos.
General Winfield Stuck
@Morbo:
Well Gosh, a mega corp not paying it’s fair share of taxes. I bet that has never happened, and must also be Obama’s fault , and why hasn’t he closed all those corporate tax loopholes, he should have done that in week two.
mr. whipple
@dan:
I’m not sure what you are referring to, Dan.
Can you clarify?
gwangung
Urg. It went down BY THAT MUCH?????
Hm. What are the overall lessons we should be drawing from here? What are the action plans that should be undertaken?
a) look askance at “creative financing”? anything that promises innovation should be tightly regulated? (yes, I know that stifles profits, but it ALSO stifles huge losses–it’s a general good to trade one for the other….)
b) don’t allow financial institutions to get too big?
and how are we going to disengage the nation’s fate from financial institutions? With the amount of money involved, it can’t be easy. And any disengagement HAS to be long, gradual and incremental…which is the one thing that is outraging progressives…
DougJ
You know I get people defending Taibbi. I usually like his stuff too. But he is human like everybody else and he can get shit wrong too. And the thing of it is, the premise of his story can be wrong AND the Obama administration could be too beholden to Wall Street. Those two things aren’t mutually exclusive. Ezra, to me, does a great job of making that point. But it seems like either you are for Taibbi, or you are a Obamabot for some folks.
Yes, I agree completely.
Good to see you commenting here again. When you and Flounder and JK are gone, I feel alone here.
Notorious P.A.T.
Yeah, we’re reeeeeeeeeal idiots for thinking Obama would hand over billions to a financial giant while asking nothing in return.
Midnight Marauder
@J. Michael Neal:
You’ve been top-notch throughout this entire thread. It is much appreciated in this small, small corner of the intertubes.
jwb
@General Winfield Stuck: You’re on a roll. (no snark intended)
Martin
@gwangung: Going down is good. It means TARP will actually cost us less.
The lessons are that a healthy amount of regulation is good. Too much and too little are bad. If things are working well, that’s an argument to leave it alone, not assume that if there was more or less that things would be better.
Kinda like sex.
gwangung
Sorry, I was being unclear. I was astounded at how MUCH it went down. And I know damn well that few people know about it.
Shouldn’t that be counted as a success for Obama?
mr. whipple
Still, that isn’t chicken scratch. With $150 billion, we might have been able to buy Lieberman a soul.
mr. whipple
No. Everything sucks.
gwangung
Wouldn’t do any good. He’d just throw it away and stomp on it.
Mary
Off the top of my head, I have to respectfully disagree with J. Michael Neal. These exceptions are special tax breaks and not not a mere bending of the rules. Presumably, the banks could not get the Congress to agree to the legislation so they went around their back to the Treasury, which is fully captured.
One would presume that the payback of the TARP funds (which allows the banks to escape the executive compensation rules — the only thing they care about) could not even occur without this tax break. The tax breaks are, in essence, the payback and, voila, they’re out from under the executive comp rules. Mission accomplished.
The paybacks are vaporware. And, John, don’t let these bullies come in here and push you around like this. It makes you look weak. And you’re not weak.
dan
@gwangung: Sorry, was responding to #22, and I see you were @23. I also see that Drum’s view has already been ratified.
J. Michael Neal
@gwangung:
I wouldn’t put it quite this way. I don’t way to say that anything that promises innovation in the financial industry ought to be tightly regulated, because “anything that promises innovation” is a really broad definition, and could end up encompassing stuff that’s good as well as stuff that’s bad. There are some thing that promise innovation that ought to be regulated to the point that they die for a lack of oxygen. I want to see derivatives exchange traded, which would change that world dramatically.
In the long run, rather than regulating anything that is new, I think that banking should be regulated in such a way that it becomes a lot more difficult to make huge profits in the industry as a whole. One of the consequences of this is that you’d have a lot fewer really smart people ending up in finance, and thus, there’d be a lot less innovation to regulate. I’d much rather see all of those really smart people coming up with innovative ideas in some other field, like theoretical physics, or telecom engineering, or making a better pancake. All of those would have more societal benefits.
As always, I would like everyone to hold off on instituting those sorts of regulations until I can find a job. Right now, trading is the only way I’m making enough money to pay the mortgage, so I don’t want that to disappear just yet.
Yeah, though this is a lot more complicated than it sounds. Coming up with ways to directly prevent banks from getting really big is hard, and a lot of them have some unpleasant side consequences. I like the idea in the financial regulation bill that passed the House of forcing all of them to contribute to a fund that would be used to let the government take them over, like the FDIC does with purely commercial banks. That doesn’t prevent banks from getting to big, but does put the onus on them of coming up with the funds that would be used to keep them from failing. I also like the idea of sliding scale capital requirements, though I haven’t seen anyone in Congress who could get that passed.
Ayup. Bank balance sheets are still a disaster, and its very hard to implement reforms while that’s the case, even if Congress wanted to.
The Sheriff Is A Ni-
J. Michael Neal is a bully?
J. Michael Neal
@Midnight Marauder: Thank you. I’m in a miserable mood, and a compliment goes a long way right now.
J. Michael Neal
@The Sheriff Is A Ni-:
You should see me on a school playground. I’ve got so much lunch money sitting in my piggy bank I can’t lift the damned thing.
Martin
@gwangung:
No, because Obama didn’t reach into Joe Lieberman’s chest and rip out his still beating heart on the floor of the Senate. Therefore he’s just as bad as Bush.
And from the sound of it, the goal is for TARP to roughly break-even. GM has announced they’re going to start paying the govt. back. I won’t call this a success until we see the regulation kick in, though.
I’d go with not a failure, not yet a success.
DougL (frmrly: Conservatively Liberal)
This is why I like this place:
Nothing ambiguous, no mincing words. Anyone ever hear Kos say “I don’t know my ass from a hole in the ground…”? ;)
People jump the gun, thus the expression. Being able to admit that takes brains.
Thanks for filling in the blanks JMN. That is another reason I like this place, there are a lot of people here from all walks of life and their knowledge is invaluable. I knew from the first read of this that there was more to the story due to the government involvement. You cleared quite a bit of that up.
Reflexively it sounds like something to howl about but as usual there is more to it than what was explained in our press. No surprise there.
Svensker
@mr. whipple:
Win.
gwangung
Hm, if what Mr. Neal was arguing is correct, I’m not sure you have a valid argument. The mere act of bailout is what triggered this; carrying out the letter of the law would actually circumvent the intent of the original law as I understand it.
J. Michael Neal
I should make some of my bigger picture feelings clear. It isn’t that I think that many of Obama’s appointees aren’t too close to Wall Street. I think that they are, though by less than a lot of people around here believe, and that there are a lot of his appointees who aren’t too close to them, and they haven’t been marginalized completely like Taibbi argues.
I just think that attacking the administration for this is silly. While it may be too close to the bankers, it’s substantially less close to them than any other institution you could find. Congress is much more in the pocket of the financial industry than they are; some individual members may not be, but both houses as a whole, and every relevant committee as a whole are. So is the press. So are the courts. (Don’t get me started on some of the recent court rulings in trying to prosecute financial shenanigans.) So are most of the state governments.
As such, it really doesn’t make much sense to train your fire on the administration. Even if you think you could change their behavior, the net value of that is minimal. Absent a change in the stance of at least some of the other institutions, getting a more favorable executive branch buys you very little. It wouldn’t actually be able to affect much change.
I also don’t think that it sends a good message to spend most of your energy attacking those who are closest to your side. It seems to me like that’s fratricide. What is the incentive to move in our direction if that only means that you are *more* likely to get attacked? I don’t get it.
Mary
I was at Treasury writing similar special breaks during the S&L crisis. But nothing so extravagant as this. And I take back calling these guys bullies and I apologize. But as a former tax lawyer, yeah, I’m offended. It’s a straight up case of regulatory capture and it seems quite clear that the banks could not get this piece of legislation through the Congress.
These banksters are shameless–they wouldn’t even come to see the President. What brats they are.
John O
Thanks for the clarification, JMN.
But I hate the tax code with a burning passion for precisely its complexity, as I always say, we’re collecting money here, not trying to solve the God puzzle with math.
If the idiots at WaPo can’t quite get it, how are the rest of us idiots supposed to?
:-)
J. Michael Neal
@Martin:
Feh. I’d only be impressed by this if Obama could do this telekinetically from across the room.
“I am disturbed by your lack of faith, Senator.”
gwangung
@DougL (frmrly: Conservatively Liberal): Yup.
Morbo
@General Winfield Stuck: My, aren’t we defensive? I didn’t say whom I blamed; I simply said it was still a giveaway. Indeed, the system is the problem, not Obama in particular; lo and behold I think we agree.
And oh great, John Stewart is jumping on the deficit hawk bandwagon. Bleh.
Martin
@Mary:
No, he has it right. If Citi never got TARP money they’d still have the $38B in losses to carry forward (the actual taxes on that money would be in the ballpark of $4B, not $38B). If Citi got TARP money and didn’t have to provide an equity stake, it’d still have the $38B carry forward. It’s only because we insisted on the equity stake that this arises.
Now, we could be pissed that Citi isn’t paying us an *extra* $4B in effective interest, but the whole point of the equity stake was to cover this. I know people want to but their boot on the necks of the banks, but I don’t agree with the government being putative in this way. Regulate the fuck out of them, sure, but if I were a shareholder and the govt was going to take $4B that I had factored would stay with the company (and yes, I do pay that kind of attention to the financials of the companies I hold) I’d be more than a little pissed about it.
gwangung
@Mary: Ah, you’re saying that I don’t know my ass from a hole in the ground. Since that’s true on these matters, I’m not particularly offended or outraged. But I’m still interested in learning what I can.
J. Michael Neal
@gwangung:
I think that it’s mostly a case of the original law never envisioning something like this occurring. It isn’t that it circumvents the intent so much as that the original intent is completely irrelevant to this particular situation. I suspect that, when the carryforward rules were being written in committe, no one stopped to ask themselves, “Now, what would happen if we had a complete financial meltdown, and the government bought one-third of the largest bank in the world? Should we allow it to continue its carryforward? How about if it sells off its stake? What do we want to happen then?”
NYT
JMN
Your explanation is not correct. The IRS gave a ruling which benefitted Citigroup. The ruling means that Citigroup pays less taxes than it otherwise would which means the government is out by x billion.
The market value of Citigroup is therefore raised by x billion but only 34% of that goes to the government. The other 66% of the value of the tax break goes to the other shareholders of Citigroup.
What purpose is served by a giveaway of 66% of the tax break value to these shareholders?
Mary
JMN–You agree that this was a matter for the JCT (Congress) and not the Treasury alone, then?
J. Michael Neal
@NYT:
Except that I didn’t deny that. Clearly, without this ruling, Citi would have owed about an additional $4 billion in taxes without this ruling.
What I said was that it’s stupid to enforce that particular regulation in this instance. It’s meant to prevent one company from purchasing another and using that company’s tax carryforward to cover its own losses. In this instance, we don’t have one company purchasing another for that purpose. We have an effective change of ownership that, because of a quirk in how the rules concerning the sales of large equity stakes work, mean that Citi would be prevented from using its tax carryforward to cover its own losses. That doesn’t make any sense.
Without actually trying to find my copy of the Code and finding out the specifics of this situation, I would bet that if the government sold off its stake in small increments, particular if it never exceeds sales of 5% of Citi’s total equity in any one year, it would never trigger this provision. I’m not positive about that, but that would be my guess. I’m not sure why selling it faster should produce that large a tax consequence.
Martin
@NYT:
I don’t think this is correct. Citi lost $38B, which means that they can carry that loss forward just like any other corporation can. They otherwise *wouldn’t* have paid taxes on the next $38B but the bailout took that tax privilege away. And since they are paying interest on their loan, I don’t see how we need to double penalize them. The equity stake was just added value for the taxpayer.
Now, I think all corporations should be paying more in taxes, but I don’t think singling them out one-by-one, after the fact, is the way to go about it.
J. Michael Neal
@Mary:
In the abstract, I think that it would have been better for Congress to pass legislation dealing with this specific situation than to deal with it by a Treasury ruling. In practice, I think a ruling was needed on a time frame that Congress couldn’t possibly meet, even if I thought that Congress wouldn’t fuck it up.
Which I don’t think. I’m about 80 delta that Congress would fuck it up. I’m pretty sure that we’d end up with an ugly loophole or two that way that we’d regret. Then again, I’ve completely lost all confidence in Congress.
burnspbesq
@J. Michael Neal:
I’m inclined to think that my former employer dropped the ball here. I understand your arguments about the purpose of 382, but the reality is that Citi would have repaid it’s TARP money regardless of whether there would be an ownership change or not. And the reason is simple: only by repaying would it get out from under the restrictions on executive comp. And that’s the only thing that matters.
NYT
Martin
Citigroup are 34% owned by the government because the preference shares bought by the government originally under TARP had to be converted to equity in a second, Citigroup specific bailout. The conversion to equity triggered a change of control so the NOLs can’t be carried forward.
The Paulson TARP did not cause the change in ownership. It was the subsequent conversion to equity which caused it. A conversion, without which, Citigroup would have been bankrupt.
There is absolutely no reason for the government to be gifting NOLs to the 66% equity holders.
gwangung
This sounds right to me (provisionally accepted until I get a better explanation).
Which provokes a question: how do we design a system that de-emphasizes this? Because it’s part and parcel of a mentality that emphasizes short term gain over long term stability. Businesses have insisted over the years that the market would take care of this, but that has not turned out to be the case.
How do we get back to a system that values long term stability and profitability over short term gain?
Martin
@burnspbesq:
If I’m reading you correctly your suggestion is that the Treasury should have held Citi’s exec comp hostage for $4B (or whatever arbitrarily fucked up corporate tax rate black hole they live in).
That’s not the kind of change I was looking for. If we want the $4B back, then just unfuckup the tax code a bit and get it out of all of the banks (which I think everyone here would support). I’d rather Congress work on that then the particulars of a discontinuity in the code that only affects a few individual players.
J. Michael Neal
@burnspbesq:
I’m pretty sure that you are right that that’s the only thing that matters to Citi. I[Edit: They] give fuck all about the rest of us.
I’m not Citi, though, and I do have other concerns.
1) I like the tax code to be enforced in a way consistent with its intent. In this particular instance, I don’t think that eliminating the carryforward does that.
2) All things being equal, I’d really like to get the government out of the business of owning 34% of the biggest bank in the world. That just strikes me as a terrible situation to be in. Not making this ruling would prevent the government from selling its stake, because of the effect it would have on Citi’s capital reserves.
So, I don’t want to let my distaste for Citi getting something it wants, for motives I find abhorrent, when it would prevent me from getting something I want. I admit that I am a small and petty enough person that I love watching the titans of finance get fucked over when it happens, but I usually find that schadenfreude is a somewhat short lived thrill, and would prefer to achieve my more concrete goals even if I have to give up that little thrill.
Mary
If these breaks will help the reinstatement of Glass-Steagal go more smoothly, I am cool with it. I hope you guys reading your financials are factoring that in because it is much more significant than these particular tax issues.
bayville
For a different view of the $38B tax break here.
burnspbesq
@gwangung:
The theory has always been that giving them equity-flavored comp would make managers think more like shareholders. The reason it hasn’t worked is that the plans are designed so that there is no meaningful risk of loss.
Partial solutions would include longer vesting, tougher performance targets, and no repricing of options that go under water after they are issued. Could be done by the SEC without going to the Hill. If the SEC had the cojones.
mikkel
Well thanks for describing that this isn’t as bad as the article says, but still I think they shouldn’t have done it. The reason is simple: if the government is going to take stakes in companies, they should be like any other investor. Whether it’s AIG or FRE/FNM or whatever, the government seems to be giving a free money pass but has much less say than a private investor of the same scale would. I think this is bad because the companies keep shitting on us even though they couldn’t get away with that if it were anyone else.
This is just another caveat that the government’s equity is different than “real” equity and encourages the idea that the government should bail out companies in whatever way is most appealing to the recipients. Am I wrong?
bayville
And Shocked Investor says the whole repaid TARP excuse is a scheme.
Mnemosyne
@bayville:
Well, it has no facts, no explanation and sheds absolutely no light on what happened like JMN did but, you’re right, it’s a view.
bayville
These guys say the $38B Citi tax break is a head scratcher.
Martin
And would therefore have no future earnings to ever pay taxes again leading to precisely the same result we’re in.
I understand that technically, Citi lost the $38B carry forward, I just don’t see that it’s reasonable that they should have. I understand Mary’s point that Treasury shouldn’t have made a $4B or so decision here, that Congress should have, but it doesn’t seem like a controversial decision from a policy perspective. From a ‘we’d really like an extra $4B for bailing you fuckers out’ perspective, that’s a different matter, but we shouldn’t yield to those impulses.
I just think there are better ways of Congress dealing with the whole situation than focusing on a handful of exceptions.
bayville
JMN has been great but as Ratigan and Tyler Durden have been saying for months, the TARP paybacks are ALL about the bonuses.
Simple as that.
General Winfield Stuck
@Morbo:
Twas snark and mild. Thou doth protest to much.
Martin
@burnspbesq:
Well, there is no risk at all. I mean, investors don’t get free shares in companies. They put a stake in – something that can be lost.
If you want managers to think like shareholders, put 100% of their pension in their company’s stock and don’t give them bonuses or stock options. Give them something that will hurt to lose like the rest of us.
Mnemosyne
@bayville:
Could you maybe find an argument against this that’s more than a paragraph long and contains at least two details? K thx bai.
NYT
Martin
The point is there is no legal obligation for a giveaway, 66% of which accrues to Citigroup shareholders.
The law says there was a change of control and they aren’t entitled to NOL carryforwards.
There is no “fairness” reason to do it either. Their shares would be worthless if it wasn’t for the equity conversion.
So why do it?
Mary
@Martin: I think it is quite controversial from a policy perspective that when the Congress refuses you a tax break, you take it anyway, from the Treasury which you have more effectively captured. These tax breaks were considered and rejected on the Hill.
J. Michael Neal
@bayville:
Maybe, but I’m really not understanding the objection here. *If* you think that allowing the TARP bailout was an outrage in the first place, I have no idea how you reach the conclusion that having the banks pay back that money with the government having turned a profit is a bad thing. Your regret is that we aren’t being paid back for the other stuff, too. How that is helped by not letting them pay back the TARP funds eludes me.
My worry about this arises precisely because I think the TARP bailout was a good thing, though imperfect in many of its details. I’m not convinced that the banks are really on solid enough footing to be shedding all of this capital, and that TARP hasn’t really finished its job. I’m good with Citigroup paying it back, a) because we converted the preferred to common, and I don’t like the government running a big bank like that*, and b) the transaction is predicated on someone else replacing the capital that the government is withdrawing. I wouldn’t be as crazy about it if it were Citi buying back the shares to put in its treasury.
*It leads to one of two things, both of which I think are bad. I’m unconvinced that we are better off with bank nationalization, either wholesale or in chunks; I think they should be privately owned. I also don’t like the corporate governance implications of a 34% shareholder *not* running a company. It’s an abdication of responsibility, and leads to all sorts of conflicts of interests and principal/agent problems.
Martin
@bayville:
So what if they are? Is it really better to pay the Chinese 4% on $700B in Treasuries in exchange for an executive not getting a $20M bonus? Come on! Use your heads, guys.
We want TARP to get paid back. We want out of that equity stake (all at a profit, preferably). Executive pay is an entirely different problem to solve, and it should be solved separately. As it stands we’re created a situation for Treasury to determine arbitrarily which bank executives can/can’t get bonuses simply by denying them the right to pay back the loan. That’s bullshit. If we want to fix the banks or executives, fix ALL of the banks or ALL of the executives.
J. Michael Neal
@Mary:
When were these tax breaks considered and rejected by Congress? I am not aware that this is a situation that it has ever addressed one way or another, save through legislation that never contemplated any situation at all like the one we’re in.
Martin
@Mary: Did Congress actually consider this situation recently? I wasn’t aware of that.
gwangung
@Mnemosyne: JMNeal and Mary have convinced me that they know what they’re talking about. Less so, for others. A link is good, but being able to explain it in their own words is also good.
Mary
Let’s be clear here. These breaks are more likely to accrue to the benefit of management rather than the shareholders. Shareholders should understand that management is screwing them, too.
gwangung
I think that’s been the case in large cap companies for well over a decade, now, with the emphasis on short term gain over long term performance…
Mary
Congress has been trying to reverse the tax breaks that Treasury is giving away to the banksters, yes. E.g., off the top of my head, http://www.mcclatchydc.com/244/story/61753.html
J. Michael Neal
@Mary:
As gwangung says, this is a different problem. I think that the state of corporate governance in this country is a disaster, but not terribly relevant to this particular problem. The extra profits generated by this particular event don’t benefit management more than shareholders much more than any other profits that Citi generates.
The problem of corporate governance is also one that is much more difficult to solve. Frankly, I don’t have a good plan for how to move forward. I know what I would like to see, namely moving in the direction of a continental European system of stakeholders having more sway, however:
1) I don’t want to go all the way in that direction, because it has its own problems, and
2) I have zero idea how to get there.
Martin
@Mary: Well, no shit, when isn’t management screwing the shareholders?
Looking at this from the standpoint of a shareholder, I would have expected that $38B carry forward. When I bought Apple during their fuckton of losses in 96-97, investors counted on those carry forwards to help them return to profitability. I know my dad who bought a number of bank stocks last year was counting on those carry forwards as well.
Yeah, executives are going to suck up a fair bit of that recovery now that they’re out from under TARP, but investors knew that was going to happen and investors do get their proxy. It might not do shit, because proxy votes are a joke, but that’s the process we have and we should make it stronger, not route around it when it sucks.
J. Michael Neal
@Mary:
The problem is that this is not the same situation as the ruling in favor of Wells Fargo. That really was a change of ownership and a ruling that allowed an acquiring company to appropriate another company’s carryforward. It’s hard to construct a scenario that is more concretely what Congress intended to prevent.
This is different. The is no “acquiring” company here that is shifting the tax asset onto its balance sheet. All it is is the same company that, for technical reasons, is losing the ability to carry its previous losses forward against its own profits.
I have no recollection of Congress ever addressing that particular question.
sweetwater jones
Wean? They’re sucking at the public teat every chance they get.
Just saw this today in the SF Chronicle. You want to get an H1N1 vaccine even if you are pregnant or for your infants or small children or you’re in a CDC at-risk group? Too fuckin’ bad. But not if you’re a banker.
Don’t forget this vaccine was bought by the US government, that is, our taxes. Too bad most of the little people in the high risk groups won’t be vaccinated until January, which is the peak of influenza and already too late to do them much good. The majority of people who will sicken or die from it by then will already have or will be in the incubation period. But hey, we’re just the summer help for these banksters, right?
Sociopaths or just soulless assholes. You decide.
bayville
By paying back TARP these banks are now in danger of being undercapitalized? But the CEOS get their year-end bonuses.
@Martin:
False choice, eh? Talk about a bad case of Stockholm Syndrome.
@Mnemosyne:
Three essays, a flow chart of TARP banks and a 3+ minute breakdown of the issue by Ratigan is pretty comprehensive in 20 minutes time. This ain’t class.
Mary
The repeal of Glass-Steagall will be a good start for how to start fixing the problems with large financial institutions.
Let’s not forget that Citibank itself was responsible for the repeal of Glass-Steagall when they merged with Travellers in a blatantly illegal transaction. It was shocking.
NYT
JMN
There is no reason for the executive to rule as they did if there is any doubt on this matter. THey should rule for the taxpayer and let Citi fight it in court if they dare.
I don’t see any justification myself. There was a change of control when the government converted its preference stake to equity.
Which incidentally is a very common scenario in distressed investments. Anyone making investments in distressed companies should not be counting on the value of the NOLs lest they be wiped via bankruptcy or change of control or diluted via equity issuance.
bago
I’m following this about as well as a programmer can, meaning I have squat for domain knowledge. However I like this debate. It is well reasoned and highly informed. Keep it up!
Mary
Each situation that a taxpayer has when they come screaming for a break from the tax rules is different. From a very quick scan of the news and commentary on this, it seems clear that Congress has indicated that they are trying to restrict the Treasury from changing the tax rules and giving large tax breaks to TARP recipients without going through Congress. I think the more relevant difference in this case is that the Wells Fargo break occurred under the Bush Administration and that someone on the Senate Finance Committee has already said that the current breaks under the Obama Administration are permissible.
Citibank needs to be broken up.
bayville
And Jim Cramer is still a douche:
J. Michael Neal
@bayville:
No, he isn’t. A douche serves a useful purpose, and makes you feel better. Cramer does neither.
“Don’t think of us as disgusting.”
“Think of us as cleansing.”
“Like a fucking . . . mint.”
Mary
Jim Cramer is running a pump and dump scheme for himself or his friends. I thought that was illegal. People used to go to jail for it.
Martin
@Mary:
I don’t see that this is the same situation at all. You’re reinforcing JMN’s point #4 above, that an acquisition by another company shouldn’t carry a free tax break with it. Congress was pissed with something that the Bush Treasury department did that changed a policy that people generally understood.
In this case, there is no 2nd entity. Citi is purchasing Citi, so it’s comparable to a massive buyback. That doesn’t eliminate the carry forward, it just limits the amount that can be used annually to about 4.5% of the equity value, but ultimately the carry forward can be used. So if I understand this all correctly, under the current rules the company may not be able to offset all $38B this year, but would offset maybe $2B per year until the $38B was used. Treasury granted an exception allowing them to use the entire amount as if no ownership change was triggered.
Ok, so maybe investors could have anticipated this, but it’s still pretty hazy because of the particulars of how TARP and the government were involved. But is this really a case of the IRS taking their taxes now vs. over time? Not that the IRS is necessarily losing out on a significant amount of tax revenue?
bayville
@J. Michael Neal:
Good point, bad analogy. And BBY finished down over 8% today.
Martin
@Mary:
Well, that’s a more than fair argument. Unfortunately, Congress agreed with Citi. Can’t go back in time. Gotta fix it going forward.
And doubly true argument here.
NYT
Martin
It was the bailout in February which triggered the change of control
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5818307.ece
Martin
@bayville:
He’s been doing this for years. He’s even admitted to pump-and-dump:
http://www.mymoneyblog.com/archives/2007/03/cramer-admits-to-manipulating-markets-calls-sec-stupid.html
I’ve seen him do it directly with Apple, particularly around options expiry. Hell, one year I even *counted* on him doing it when timing selling out of a straddle, and sure enough, he showed up right on schedule. Made money on both the put and call within a week of each other. Good times. He sure fucked over a lot of people though.
I want my SEC back.
Martin
@NYT:
Oh, I know that. I was referring to the timing of the Wells Fargo/Wachovia deal that Mary was referencing. I’m not saying that the change in administration was material in this, but I see the laxing of the rules for Wells Fargo being a more significant break from expected policy than the Citi deal.
And just to be clear, I’ve hated Citi with a white hot passion ever since they got me and my dads SS# mixed up and had me married to my mom and joint on a mortgage with her for 5 years. I’m not cool with playing Oedipus on my credit report.
I just think this has been blown out of proportion.
NYT
Martin
Well the tax on the full $38 billion would come to about $13 billion. Not chump change.
And Citigroup is the absolute dregs of the big consumer banks with the largest number of bad loans, the most ties back into politics, the most egregious compensation schemes etc
Says a lot about what you can expect from the Obama administration for the next 3 years.
Mnemosyne
@bayville:
I watched the video. It didn’t even brush against the issue under discussion — it was a general discussion of TARP repayments, not this specific issue regarding this tax break.
As I said, if you can find an actual discussion of the actual issue at hand that refutes anything here, please present it. “TARP is all a big scam” is not a refutation of the points that JMN and Mary are making and, frankly, it’s disrespectful to them since you’ve basically just said that discussing the tax issue is stupid since it’s all a scam anyway.
burnspbesq
@Martin:
Can’t be done without a change in the statute. Under a long line of case law interpreting the relevant provisions of ERISA, failure to diversify is almost per se a breach of fiduciary duty.
Oh, and another thing: have you ever worked for a public company? I have, and in each case I can say with absolute certainty that equity-flavored comp was in lieu of, rather than in addition to, cash bonuses.
gwangung
Rank and file, most certainly, but that doesn’t necessarily apply to top management (at least, not according to the proxy statements I’ve read).
Martin
@gwangung:
No, it certainly does not. I don’t begrudge the guy making $80K from picking up a $20K bonus. I begrudge the guy making $500K picking up a $2M bonus. Didn’t get the bonus? Boo-fucking-hoo. Ran the company into bankruptcy after 3 years of bonuses? Oh my, how will you survive unemployed with only $7.5M and CEO on your resume?
John Sears
I read the WAPO article, and I’m not sure what the controversy is. J. Michael Neal’s point is made about halfway down the page; I’m not sure if I agree or disagree with the decision, but on the whole I thought they laid out the argument fairly well.
As for the idea of a national bank: I really wish there was one. I’d much rather the profit from the credit card I have to have go into the Federal Treasury than into Chase’s coffers.
(For example, I’m traveling home for the holidays this weekend. Try doing that without a card to guarantee rooms and what not.)
I moved my checking and savings into a pinko commie Credit Union a long time ago, and never looked back. Banks are utter scum.
liberal
@jcricket:
Absolutely. All one had to do was look up their Americans for Democratic Action Senate voting scores. They were pretty much the same.
liberal
@J. Michael Neal:
If you actually knew anything about the matter, you’d know that TARP was only one of the programs, and not necessarily the biggest one.
Have you heard of something called “the Fed balance sheet”? Or how about “loan guarantees to Citibank”?
liberal
@General Winfield Stuck:
Uh, wrong.
liberal
@J. Michael Neal:
Uh, did we get a good price, given the risk of the original investment? Why did they convert when they did? Did they take any measures at all to maximize taxpayer return?
General Winfield Stuck
@liberal:
Uh, shut the fuck up PUMA wanker.
sparky
@NYT: exactly. there wouldn’t be any equity holders except for government action, so this is, truly, a gift.
liberal
@General Winfield Stuck:
Fuck yourself, Obama-can-do-no-wrong moron.
If you actually want to learn something about these issues, instead of listening to J.M. Neal blither on like an idiot about not wanting the government to own 34% of an insolvent bank, why don’t you stop wasting your time posting love notes to Obama here, and instead go over to nakedcapitalism.com and actually learn something about these matters.
liberal
@General Winfield Stuck:
Oh, by the way, I gave thousands of dollars to Obama, none to Hillary, and voted for Obama in the primary and the general. So up your ass with a hot poker; like most of your comments, this one shows again you don’t know what you’re talking about.
liberal
@General Winfield Stuck:
How would I be a PUMA wanker if I gave thousands of dollars to Obama, none to Hillary, and voted for Obama in the primaries and the general, and have (AFAICR) never said much of a good word about Hillary, anywhere?
More evidence you don’t know what you’re talking about.
liberal
@John Sears:
The point is that any evidence that Obama has willfully continued Bush’s sellout to the FIRE sector is verboten, since Obama can do no wrong.
General Winfield Stuck
@liberal:
Idiots like you think Obama relishes doing all this intervention work with Banks and the like. You love it to be all sanctimonious and ideologically superior without nary a fucking clue about solving this big shit sandwich Bush gave us and the consequences of letting these corporate behemoths fail. Fuck you and your arrogance and ignorance. No one is saying Obama has handled this perfectly, because no one has a playbook/ My point was that the TARP money is being paid back, so the fuck what if some interest wasn’t. chickenfeed in the big scheme of things, but enough to keep you goddamn worthless left side Malkins from preening your libtard feathers of superiority. You are trying your damndest to elect a republican in the WH, because you like it, to be outraged, and hope that the entire country goes to shit so there can be a chance for your dogma to be installed as governing this country. Fuck you and all like you, and don’t tell me to go anywhere you worthless shithouse hack. This isn’t fucking Confluence, of Kos, or Hamshers palace of stupid.
So you come here and grade us on our errors, with vacuous little comments of “uh, wrong”
piss on you liberal. all day every day
liberal
@NYT:
From the content of his posts here, I don’t have the impression that JMN really cares about the taxpayer getting a good deal out of any of this. Like his aside that TARP is being paid back with a profit to the Treasury, which numerous commentators elsewhere have pointed out is a red herring if you consider all the bailout programs.
sparky
it was wrong of me to say that the equity holders would have had nothing absent intervention, but i do think it’s a fair point to say that absent the government purchase the tax issue would have been written off in the sense that the true value of the equity was–and probably still is–well south of where that carry-forward would matter to anyone.
though i think Neal’s points are well-made, i think it is becoming increasingly clear that in the current phase of our oligarchy self-destruction era, worrying about principal-agent issues with respect to government intercession in Citi rises to perhaps the level of rearranging the deck chairs on the Titanic: the time to worry about that was before, when the corporation was essentially being pillaged for the benefit of management.
Obama did inherit a mess, it’s true, but he has done NOTHING to effect substantive changes, and has given the banks free rein. Sorry, but it’s so.
one other point. i think it is interesting that so much attention is focused on TARP when it is after all a really small part of the giveaway (bailout?) to the F and I of FIRE.
liberal
@General Winfield Stuck:
I didn’t need a playbook to realize that picking Geithner and Summers was a sellout and a disaster.
God, you’re a prick. And a stupid one at that.
General Winfield Stuck
@liberal:
To fools like you. Absolutely goddamn right.
Obama’s biggest sin in this whole sorry episode is being terrified the entire economic structure in this country will collapse on his watch. It is likely, in my opinion as to why he hired Gheitner and Summers in the first place. Obama may be a lot of things but being a corporatist is not one of them. Now piss off.
Original Lee
@J. Michael Neal: I love a man who can write well about financial stuff. :->
liberal
@General Winfield Stuck:
As usual, you apologist for corporate whores, you know nothing.
I’m well aware that it’s a losing battle to pull the Naderite “let the shit rain so that we can elect a real leftie,” and don’t support that strategy. OTOH, I’m also aware that Obama has continued this absurd handout to the banksters. If continuing a handout nominally worth trillions of dollars, and actually hundreds of billions, to the FIRE sector isn’t going to lead to outrage, nothing will.
Furthermore, it’s hardly a “left thing”.
liberal
@General Winfield Stuck:
Obama’s biggest sin in this whole sorry episode is being terrified the entire economic structure in this country will collapse on his watch. It is likely, in my opinion as to why he hired Gheitner and Summers in the first place.
Really? He hired some of the people responsible for this disaster because he was terrified?
Making sense isn’t one of your strong suits.
General Winfield Stuck
@liberal:
First thing you got right. It is also a tea bag thing. Great company you keep. Don’t worry be happy.
liberal
@General Winfield Stuck:
LMAO!
There are many, many ways in which the Dems are far better than the Republicans. Unfortunately—and this clearly extends to Obama—their position on corporatism isn’t one of them.
General Winfield Stuck
@liberal:
Yes, and it is why he hired people who knew where the bodies were buried, so as not to completely kill the economy by hiring people who didn’t and could fuck up things by trying to do too much too fast without full knowledge of the details of the problem.
And for the record, I have from when he hired these two rats, been opposed to it. I don’t trust either. But I am not president and responsible for not causing a global financial calamity, and neither are you.
And it is hard to argue he was wrong, for the simple reason we didn’t fall into the Depression many were predicting. But there is still much to do to re regulate these crooks, and we will see what happens on that front.
liberal
@General Winfield Stuck:
LOL! More ignorant pablum from Thuh General.
One of the points Taibbi made well recently is that it’s not a teabag thing.
If you look at people writing and commenting at places like nakedcapitalism, The Big Picture, and The Baseline Scenario, what they have in common is that they know the issues and are outraged about the giveaway. There’s nothing left, right, or center about it, just a sense of just and unjust.
General Winfield Stuck
@liberal:
Taibbi was wrong about that then.
What pompous fluff.
liberal
@General Winfield Stuck:
And if you look at the behavior of e.g. Barney Frank, not much is going to happen on that front.
Or Obama himself. His attempted, laughable jawboning of the banksters makes him look either stupid or corrupt. Since he’s obviously not stupid, I unfortunately fall on the latter.
liberal
@General Winfield Stuck:
Yeah, the claim that people could put ideological differences aside when the government is willfully handing over hundreds of billions or trillions to the banksters is fluff. Unlike hard-headed, calculated support for Obama.
liberal
@General Winfield Stuck:
By that silly logic, we can’t criticize any president for any weighty decision.
liberal
@General Winfield Stuck:
Uh, nope. Among other things, the teabagger rank-and-file aren’t intelligent enough to understand the issues at hand, and it doesn’t appeal to any of their base instincts (like, say, something related to immigration).
General Winfield Stuck
@liberal:
The whole point of my original comment was whether it was right or wrong. THE MONEY IS BEING PAID BACK.
I am only surprised that your ilk is not shrieking about how Obama the corporatist is such an incompetent one. I mean what successful competent corporatist makes corporations pay back their wingnut welfare gifts?
General Winfield Stuck
@liberal:
Sure you can. But this little flame comes after you criticized something I said. Whole different kettle of fish. since I am present to defend myself.
General Winfield Stuck
My New Years resolution will be to quit cussing so much, again.
But till then, I plan to stock up.
Emma
I know that I’m late to the party, but one comment: I am beginning to hate with a hot passion everyone in every thread who tells me “see what you can expect from Obama? This is what you’ll get from Obama. Obama’s government has made no changes and it’s a failure and it’s better to just re-elect republicans anyway if Obama doesn’t act exactly like Bush and become a dictator (different phrasings for this one)”.
My family arrived in the United States in 1970. You could still get 4% interest in a passbook savings account in most institutions and Savings and Loans were a place where you put your savings and you got your mortage or car loans. Some of you older farts like me might remember this state of affairs.
As I remember it, things started to go to crap with the savings and loan deregulation. Now, part of that was due to the fact that the savings and loans had got caught in the higher interest rates/higher oil prices mess of the 1970s and deregulation was seen as a way to allow Savings and Loans to be more competitive. Stupidity, cupidity, and real tragedy met center stage, and their bastard child has never stopped bleeding all over the apron, because the “deregulation is good” meme had caught on.
So… in my (admittedly faulty and economics challenged) way, I am aware that this is a systemic problem of very long standing. The laws, the rules and regulations, the mindset of the major players in both party, combined with the financial institutions’ stake in keeping the honey wagon going have entrenched this whatever you want to call it (philosophy is too honorable a word) in our political and economic system. And now we are demanding that Obama The Savior step in, wave his hand, and solve it all in less than a year, with Congress doing its level best to keep their honey wagon going.
Hate the man or not, that’s your business. But for God’s sake, he has been effectively president what, eleven months? Democrats deride and ignore his successes and keep bellowing that if he doesn’t do what we want him to do RIGHT NOW OR WE’LL STOMP OUR FEET AND HOLD OUR BREATHS AND TURN BLUE AND HE’S JUST LIKE BUSH ANYWAY.
My father, a hard-assed Cuban conservative, told me once that he wasn’t worried about Democrats getting another president into the White House because we would destroy him ourselves. Damned if he wasn’t right.
Joel
@J. Michael Neal: Thanks for the clarity.
Like Paddy Hirsch and his whiteboard.
Brachiator
@liberal:
Perhaps he’s just being outplayed by the banks. The UK is pushing a 50% tax on banker bonuses. France is considering doing the same. The banks are just laughing it off. And somehow, despite the financial panic not too long ago, some banks are finding ways to pay back the bailout. Even though some of this actually may result in a profit to the government, the trail of failed banks and the strain on the FDIC and other agencies is still a huge drag on the economy.
Meanwhile, the financial lobby and their enablers in the Congress have insulated the banks from any fear of effective regulation. The most significant attempts to rein in the banks are coming from some states, not from the feds, and state efforts can easily be blunted by Congress.
It’s still early in the game, but so far the advantage is all with the financial industry.