They are messing with the bailout again.
Now the Republicans in Congress are crafting an "alternate" plan that includes a provision to eliminate capital gains for 2 years and provides massive business tax refunds. Talk about an earmark! Now I am outraged and demanding my representative vote this down. Effectively, what this means is that, now that the value of our homes is at a 5-year low and loan virtual portfolios are being written down 50%, the people who come in and buy them at fire-sale prices can do so, double up in 2 years and pay no taxes. Talk about a land grab for the rich!
At the same time, some House members have signaled they are against allowing changes in mark to market accounting rules that will allow the banks to carry distressed assets long-term, rather than being forced to liquidate them at fire-sale prices. Does anyone see a pattern here? No wonder David Fry asks in his S&P chart: "Where are the adults?"
This statement from Congressman David Davis, who co-sponsored the alternate bill, gives you a pretty good idea of how far apart these new provisions are from what was originally proposed. Davis says of the oirginal bill: "Make no mistake about it, this legislation provides a taxpayer financed bailout of those who have acted irresponsibly. It federalizes and socializes another sector of our economy, fundamentally changing yet again the federal government’s role in the private economy. And, most importantly, this bill does nothing to address the problems that led to this financial crisis in the first place." Interestingly, while he decries bailing out those who act irresponsibly, a cornerstone of his bill is to "Allow companies to carry-back losses arising in tax years ending in 2007, 2008, or 2009 back 5 years, generating a tax refund and immediate capital." So WALL STREET firms can ask for hundreds of Billions of dollars in taxes back against the write-downs they are taking now in their virtual portfolios! Madness!!!
The House and Senate also added earmarks for alternative energy credits to the bailout package but there is some logic to that as the impasse of this week has threatened the extension of existing energy credits that are set to expire in three months. This has been tanking the solar sector and boosting oil in recent trading and is actually an important piece of legislation…