Socializing The Loss: Carrying To and Fro

Here’s another beauty…

Not to be left out of the fun of robbing "Main Street" (middleclass taxpayers and everyone else) blind to bailout Wall Street, the IRS today announced that it will change (and/or not enforce) regulations to allow Wall Street finance and mortgage lending firms to count losses on delinquent mortgages (or foreclosed and all other mortgage losses) against their ordinary income.

Better still, this change fits perfectly with recent legislation proposed in the Senate that would expand “carry back” and “carry forward” rules to allow these losses to be “carried back” as much as four years, meaning the losses could be applied against regular income for any of the last four tax years and also “carried forward” to future tax years.

So effective immediately Wall Street lending and other financial firms, including Fannie Mae and Freddie Mac, can seek refunds for these losses going back two years and, if the Senate bill is approved and passed as law, an additional two years.

Here’s my favorite quote from the Bloomberg piece that noted that to date, 70 of the world's biggest banks, securities firms and mortgage companies have taken about $290 billion in asset write-downs and credit losses since the beginning of 2007:

``This is a serious windfall,'' said Christopher Whalen, managing director of Hawthorne, California-based Institutional Risk Analytics. ``Essentially, the Street gets a $290 billion tax shelter they did not have available'' under the earlier IRS position.