. . . Under Attorney General Eric Holder, whose agency has not prosecuted a single major bank or executive in the aftermath of the 2008 meltdown, the Justice Department has been criticized, not least by Democrats, for believing banks are too big to fail and their top brass too big to jail. But here’s the twist. It turns out that banks are also too big to tax: Windfall tax deductions set against the civil settlements imposed by the Justice Department total more than $44 billion, according to Newsweek estimates.”
It may also be quite shocking to learn that the reason that the Big Banks agree to the large settlements is that they know that a large percentage of the fines are tax-deductible. Would it surprise you to learn that even the Justice Department can gain from these large multi-billion dollar “settlements”?
“But there’s another, more self-serving reason for the Justice Department to hike civil settlement payments while allowing for most of the sum to be tax-deductible. The agency receives a cut of up to 3 percent of its share of the total settlements for its Working Capital Fund, a slush fund common across major government agencies . . .
When the Banksters and financial companies are allowed to “pay” civil fines and penalties that can be deducted from their corporate taxes, just how is this process providing any incentive for the banks to stop breaking the law? Since the Justice Department itself can profit from the settlement designed to allow for the deduction of these fines, where is the incentive for the Justice Department to actually prosecute these Banksters on criminal charges? . . .According to Rafferty, the SEC has disallowed "guilty" financial companies from taking tax deductions for the fines they're ordered to pay since 2003. On a brighter note, Rafferty says legislation has been introduced in Congress called "Truth in Settlements," which would require the Justice Department to disclose hidden tax deductions in settlement agreements. The House Committee on Oversight and Reform has asked the Justice Department to explain why civil settlements have been reached with every single bank found to have broken the law instead of bringing criminal charges against the guilty parties, like it does with ordinary Americans who lack the political clout of the banking industry.