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DOJ Allows Bank of America to Deduct $12 Billion of $17 Billion Settlement

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posted on Aug, 22 2014 @ 10:57 AM
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Bank of America will pay roughly $4 billion less to the government after-tax than the $16.65 billion it agreed to in a settlement over soured mortgage securities, because parts of the settlement will be tax deductible, the bank said Thursday.

The bank has already taken some of the savings from the settlement's tax deductions in previous quarters, so the savings won't all come in the current third quarter. But tallying the total tax savings to roughly $4 billion "would be fair," a bank spokesman said.


Before I began my righteous ranting there is one more quote you should read.

Federal law allows companies to deduct large portions of the costs of settling with federal agencies on their tax returns. But that effectively shifts part of the settlement's burden to taxpayers,


So here we have one the biggest of the bad guys--- who very nearly sent our country into another great depression--- simply because they were making lots and lots of money selling these bad mortgages, useless bad mortgages, that they purposely hid and bundled up with a few good investments just to make them someone else's problem.

They got caught and were given the largest fine in recorded history for their dishonesty and deceitful practices... fined 17 billion dollars in fact.... that'll teach those fat cats to behave themselves...teach them they can't go around cheating you and I, the middleclass who make up the bedrock, the foundation of this great country, right?

Naw... these are the big boys... not people like you and me... 17 billion dollar fine.. aha, we'll just write it off our taxes... no big deal... business as usual...


"Criminal and civil fines are not deductible, but pretty much everything else is," said Robert Willens, a tax and accounting expert who has his own firm, Robert Willens LLC.

That means that up to $11.63 billion of the settlement would be deductible, depending on how much the bank incurs in costs associated with the consumer relief. With a corporate tax rate of 35%, that suggests savings of $4.07 billion. Bank of America said last month that it expects an effective tax rate of about 31% for the second half of 2014, absent any unusual items, and that would suggest savings of about $3.6 billion


In other words... first they steal our money through these bad investments... and now they will take our tax dollars to pay for 7/8th of their court imposed fines...

am I the only one who finds something deeply troubling here???

ETA Forbes now has their version of this same storyBofA Grabs $12 Billion Tax Write-Off From $17 Billion Mortgage Settlement
edit on 22-8-2014 by HardCorps because: (no reason given)




posted on Aug, 22 2014 @ 10:59 AM
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a reply to: HardCorps

This settlement is a farce and I am outraged.



posted on Aug, 22 2014 @ 11:06 AM
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a reply to: HardCorps

This seems to me, to be the most rididuclous abuse of the system pertaining to such matters, that one could possibly come across.

I am unsurprised by it, but I am dismayed at its blatancy.



posted on Aug, 22 2014 @ 11:07 AM
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I think you may be confusing the word deductible with deducted.
I am not seeing where they will be getting 7/8 of the settlement paid by tax dollars.
They way that I read it, Bank of America will be paying 13.05 Billion dollars in the settlement.
edit on bu312014-08-22T11:12:04-05:0011America/ChicagoFri, 22 Aug 2014 11:12:04 -050011u14 by butcherguy because: (no reason given)



posted on Aug, 22 2014 @ 11:09 AM
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They will be paying the fine. Then they can deduct part of the fine from their taxable income for the year. The tax payers are not paying the fine for them.



posted on Aug, 22 2014 @ 11:10 AM
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originally posted by: th3dudeabides
a reply to: HardCorps

This settlement is a farce and I am outraged.


There's not a lot we can do about it...
Six Banks Control 60% of Gross National Product. They are Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo.

In a real way you could say these 6 mega Banks now have controlling interest in our nations economy. with that kind of money comes power, Power to dictate and set policy...

People like you and I are nothing more than a ledger entry to people like them. One that can easily inked out.



posted on Aug, 22 2014 @ 11:10 AM
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So you know these settlements we keep hearing about? Who exactly gets this money? Notwithstanding the fact that whoever writes these laws that allow things like this to be tax deductible is clearly the bitch of big business. This country is so screwed.



posted on Aug, 22 2014 @ 11:10 AM
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Well then, I think the DOJ should be petitioned to file criminal charges against them so the fines stick.

Something big enough to make them feel some pain.

600 - 700 billion doesn't sound unreasonable.
edit on 22-8-2014 by watchitburn because: (no reason given)



posted on Aug, 22 2014 @ 11:11 AM
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a reply to: butcherguy

look at the last quote
from my OP. the part where it reads

That means that up to $11.63 billion of the settlement would be deductible, depending on how much the bank incurs in costs associated with the consumer relief. With a corporate tax rate of 35%, that suggests savings of $4.07 billion.



posted on Aug, 22 2014 @ 11:14 AM
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originally posted by: HardCorps
a reply to: butcherguy

look at the last quote
from my OP. the part where it reads

That means that up to $11.63 billion of the settlement would be deductible, depending on how much the bank incurs in costs associated with the consumer relief. With a corporate tax rate of 35%, that suggests savings of $4.07 billion.



I think that maybe you are confusing deductible with deducted?

They will be using the difference in the amount of money that they have due to paying off the settlement to adjust the amount of tax that they pay.
edit on bu312014-08-22T11:15:17-05:0011America/ChicagoFri, 22 Aug 2014 11:15:17 -050011u14 by butcherguy because: (no reason given)



posted on Aug, 22 2014 @ 11:19 AM
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a reply to: butcherguy

I disagree..

But other amounts paid can be deducted as ordinary business expenses—including the $4.63 billion in compensatory payments that Bank of America agreed to pay, and the costs it incurs in providing $7 billion in mortgage modifications for struggling homeowners and other consumer relief.


7 plus 4.63 billion =11.63 billion in write-off's they intend to take.
either way you look at it... the bank will in essence only pay about 4 billion in fines... the rest will be written off as a business expense.


edit on 22-8-2014 by HardCorps because: (no reason given)



posted on Aug, 22 2014 @ 11:24 AM
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originally posted by: HardCorps
a reply to: butcherguy

I disagree..

But other amounts paid can be deducted as ordinary business expenses—including the $4.63 billion in compensatory payments that Bank of America agreed to pay, and the costs it incurs in providing $7 billion in mortgage modifications for struggling homeowners and other consumer relief.


7 plus 4.63 billion + 11.63 billion in write-off's they intend to take.
either way you look at it... the bank will in essence only pay about 4 billion in fines... the rest will be written off as a business expense.



That's not how it works.
They will have to claim a profit income on their taxes then pay 30 something percent taxes on that income. This is saying that 12 billion will be deducted from their profit income. That will save them 30 something percent of the 12 billion in taxes. They still have to pay the 12 billion fine.



posted on Aug, 22 2014 @ 11:37 AM
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a reply to: Hoosierdaddy71

not so... 7 billion of that is to go towards loan mod's to homeowners... soft money...

Nonetheless, the punishment for the banks may be considerably lighter than it looks. The consumer relief is where the mismatch between headline settlement figures and actual costs occurs.

As part of the deals, banks can modify loans that they still hold in order to help struggling borrowers. But such modifications may not require any new financial sacrifice on the part of the bank. Indeed, on Thursday, analysts with Moody’s Investors Service wrote, “most of the cost of homeowner relief is already incorporated into existing loan-loss reserves.”

The mortgage settlements may prompt protests from the large investment firms that bought the bonds that are backed with faulty mortgages.

Many loans owned by the investors through such bonds could get modified under the settlements, causing a hit for the investors but not the banks.


the banks are only acting as the instrument for the restructure ... the actual money is coming from investors and government programs like Fannie Mae...

the banks money is never put at risk yet they get to claim the tax write off's for being the loan originator...

yeah I know it gets really complicated but that's the way it is ...

And it's not just me saying so...
From Forbes

BofA Grabs $12 Billion Tax Write-Off From $17 Billion Mortgage Settlement



edit on 22-8-2014 by HardCorps because: (no reason given)



posted on Aug, 22 2014 @ 11:39 AM
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a reply to: HardCorps

F&S for the OP

Not sure where you came up with the savings from the deduction amounting to 7/8 of the fine, (I'm see it as about 1/4).

Nevertheless, the fine amounts to a mere drop-in-the-bucket when compared to the actual damaged caused by the fraudulent banking activities perpetrated by BOA and the other large banking/home mortgage entities here in America. The resulting financial meltdown cost americans across the board, regardless of whether or not they had a mortgage.

Pretty much everyone with a retirement account took a big hit, usually in the 30% to 60% of assets range and how will they ever be made whole? Answer is, "they won't." Truth is, the only thing they can hope for is some kind of justice and fines alone will never bring that about.

Just the other day, I heard the CEO of a smaller community bank that wasn't involved in the meltdown make a statement regarding this settlement and he said something to the effect of, "Banks don't commit fraud, but bankers do and someone needs to go to jail for the crimes that were committed."

IMO, no amount of fines/settlements will ever be large enough to stop corporate greed. Especially when they're allowed to write it off as part of the cost of doing business and get a tax break to boot! Until we start mandating jail time for these types of crimes, we shouldn't expect that we've seen the last of them.

So far as I can tell, the entire fiasco has done nothing but benefit the big banks all the way down the line and CEOs are still getting their multi-million dollar bonuses.

First they make all the money from the fraud they perpetrated.

Then when it blows up in their face, we determine that they are "too big to fail" and we bail them out at taxpayer expense.

Then as part of the recovery, we provide them with what is basically free money from the fed for 1% or less so they can turn around and lend it out for 20% or more.

Then we basically slap them on the wrist with this petty fine and just to make sure they get one more chance to rub it in our face, we give them what amounts to a 4 billion dollar tax break by allowing them to write off the fine on their tax returns.

Now I have to ask; "So long as they're getting bonuses instead of jail time, why wouldn't they do it again?"




edit on 22-8-2014 by Flatfish because: (no reason given)



posted on Aug, 22 2014 @ 11:43 AM
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a reply to: Hoosierdaddy71

No matter the math, the point is BoA won't be paying the full amount of the fine



posted on Aug, 22 2014 @ 11:47 AM
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a reply to: HardCorps


When I buy a 10k dollar machine for my shop I get to write 10k of my taxes right?
Wrong..
I pay 10k out of pocket, then save 30 percent on that money by tax savings. I still spent 6500 out of pocket.
This whole ordeal comes down to people buying houses they could not afford and then blaming the bank for loaning them the money.



posted on Aug, 22 2014 @ 11:49 AM
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originally posted by: EyesOpenMouthShut
a reply to: Hoosierdaddy71

No matter the math, the point is BoA won't be paying the full amount of the fine

Correct.
But the amount that they will not end up paying is just short of 4 Billion dollars.

I think a flat tax would be wonderful. A flat rate for profits period... no writing off settlements..
edit on b000000312014-08-22T11:49:27-05:0011America/ChicagoFri, 22 Aug 2014 11:49:27 -05001100000014 by butcherguy because: (no reason given)



posted on Aug, 22 2014 @ 11:49 AM
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originally posted by: Flatfish
a reply to: HardCorps

F&S for the OP

Not sure where you came up with the savings from the deduction amounting to 7/8 of the fine, (I'm see it as about 1/4).

Nevertheless, the fine amounts to a mere drop-in-the-bucket when compared to the actual damaged caused by the fraudulent banking activities perpetrated by BOA and the other large banking/home mortgage entities here in America. The resulting financial meltdown cost americans across the board, regardless of whether or not they had a mortgage.

Pretty much everyone with a retirement account took a big hit, usually in the 30% to 60% of assets range and how will they ever be made whole? Answer is, "they won't." Truth is, the only thing they can hope for is some kind of justice and fines alone will never bring that about.

Just the other day, I heard the CEO of a smaller community bank that wasn't involved in the meltdown make a statement regarding this settlement and he said something to the effect of, "Banks don't commit fraud, but bankers do and someone needs to go to jail for the crimes that were committed."

IMO, no amount of fines/settlements will ever be large enough to stop corporate greed. Especially when they're allowed to write it off as part of the cost of doing business and get a tax break to boot! Until we start mandating jail time for these types of crimes, we shouldn't expect that we've seen the last of them.

So far as I can tell, the entire fiasco has done nothing but benefit the big banks all the way down the line and CEOs are still getting their multi-million dollar bonuses.

First they make all the money from the fraud they perpetrated.

Then when it blows up in their face, we determine that they are "too big to fail" and we bail them out at taxpayer expense.

Then as part of the recovery, we provide them with what is basically free money from the fed for 1% or less so they can turn around and lend it out for 20% or more.

Then we basically slap them on the wrist with this petty fine and just to make sure they get one more chance to rub it in our face, we give them what amounts to a 4 billion dollar tax break by allowing them to write off the fine on their tax returns.

Now I have to ask; "So long as they're getting bonuses instead of jail time, why wouldn't they do it again?"





We don't often agree, but when we DO? You get a "BIG SHINY STAR"!




posted on Aug, 22 2014 @ 11:50 AM
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a reply to: seeker1963
Flatfish got a star from me on that post too!



posted on Aug, 22 2014 @ 11:51 AM
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originally posted by: EyesOpenMouthShut
a reply to: Hoosierdaddy71

No matter the math, the point is BoA won't be paying the full amount of the fine


Yes they will,
They can just recoup 4 billion in tax savings.
That is no different than you donating money to charity and they writing the donation off of your taxes. Same principle on a much bigger scale.



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