The more details emerge, the clearer it becomes that Washington’s handling of the Wall Street bailout is not merely incompetent. It is borderline criminal.
In a moment of high panic in late September, the U.S. Treasury unilaterally pushed through a radical change in how bank mergers are taxed — a change long sought by the industry. Despite the fact that this move will deprive the government of as much as $140 billion in tax revenue, lawmakers found out only after the fact. According to the Washington Post, more than a dozen tax attorneys agree that “Treasury had no authority to issue the [tax change] notice.”
Of equally dubious legality are the equity deals Treasury has negotiated with many of the country’s banks. According to Congressman Barney Frank, one of the architects of the legislation that enables the deals, “Any use of these funds for any purpose other than lending — for bonuses, for severance pay, for dividends, for acquisitions of other institutions, etc. — is a violation of the act.” Yet this is exactly how the funds are being used.
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