The Sound Of Silence

Common ground finally found 

The United States Senate has had a bipartisanship moment! So far apart so much of the time, the senate agreed on something significant: Do nothing about elimination of the punitive penalty tax write off that may significantly reduce last week’s $5.6 billion fine for wrongdoing by six major banks. 

Maybe calling it “criminality ‘on a massive scale’”—as the FBI did—was an overstatement. * Since four of the banks did agree to plead guilty (instead of the usual “no contest”), maybe they will change their ways. Maybe next time the “Cartel” member who said, “If you ain’t cheating, you ain’t trying,” will use better grammar.

What’s more, given our overcrowded penitentiaries, how do we jail a corporation the size of Citigroup or JPMorgan Chase (two of the six)? And what did they really do that was so bad? The bankers only manipulated foreign exchange rates in order to make extra bucks on the transactions. Bankers will be bankers. They must be profitable: to be profitable they must be creative. And they sure were creative until they were caught.

The United States Senate leant a helping hand: Most senators have simply said nothing, like the 25 Republican and Democratic senators on the Senate Finance Committee who have steered clear of bringing out Senator Leahy’s No Tax Write-Off For Corporate Wrongdoing Act that would eliminate the tax code provision allowing punitive damage fines to be tax deductible. It was no secret the six big banks were about to settle with guilty pleas to felonies. Had that bill gotten to the senate floor—or worse got passed—the banks might actually have had to pay the full $5.6bn.

So celebrate all the good news:

In the 2016 senate races, bankers with good memories will be generous with campaign contributions to cooperative Finance Committee members. Some of what was saved by the felony deduction could be invested in a senate campaign or two.

In a refreshing way, bankers are telling the truth: some of the illegal stuff they do is how they do business. Thus it makes perfect sense to get tax deductions for business-related felonies. (Will that be included in the social studies American government curriculum?)

And bipartisanship is rare, these days. So let’s treasure the moment. Many US Senators are also treasuring it: silence is golden.

* For much more, see the front page stories in Six banks fined total of $5.6bn over rigging of forex markets, Financial Times, May 21, 2015 and Banks Admit to Rig Currency Price, The New York Times, May 21 2015. My quotations are from the Financial Times story.



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