re: #251 albusteve

The federal government quietly agreed to forgo billions of dollars in potential tax payments from Citigroup as part of the deal announced this week to wean the company from the massive taxpayer bailout that helped it survive the financial crisis.

[Link: www.washingtonpost.com…]

massive tax break for Wall Street…of course the feds own part of Citigroup

I’m not sure that’s true. I thought part of Citibank’s repayment deal was the repurchase of all government-owned shares, which would remove government ownership from the picture.

I think it’s more a case of the government demanding that banks free up lending in an environment where…the government is also demanding that they not lend money irresponsibly, to avoid many of the problems that caused in the past. More stringent capitalization requirements make such lending difficult, so kicking them some dough in the form of a tax break is one way around that problem.

In the end, it still sucks, since banks aren’t going to loan into a zero-interest environment that’s got nowhere to go but up. It risks leaving them holding poorly performing loans relative to the future interest market.