The fed and state regulators were crowing last week about the $9 billion they had convinced the banks to pay as a way to compensate hundreds of thousands of people whose homes were seized improperly, a result of abuses such as “robo-signing.”
$$9 billion sounds like a lot of money until you realize (as the Huffington Post reported below) that the payment is going to be tax deductible. As a result, the banks will be likely able to reduce their tax liability by $3 billion. That’s $3 billion that the federal and state governments won’t collect in taxes, $3 billion that won’t be available to fund the deficit or state and federal programs. Good job regulators! At some point, one would think pride would seep into the dialog and these regulators would get tired of being taken by the banksters. One can hope.