Catching a Break

Public Campaign Action Fund is now Every Voice. Check out our new website: EveryVoice.org

Bank of America has announced it's buying out Countrywide Financial for a cool $4.1 billion and taking a huge tax break by writing off the losses that Countrywide brings to the table from the collapse of the subprime mortgage market, and shifting the tax burden right on over to the taxpayers (many of whom were bitten by the subprime crisis and are now without homes). That's a nice bit of tax policy the commercial banking sector bought with its hundreds of millions in campaign contributions to federal candidates.

The commercial banking sector has dumped $191,424,027 into federal campaigns since 1990. Bank of America is responsible for $14,374,220 of that (figures courtesy of the Center for Responsive Politics). How much do we think Average Homeowner whose lost her home in the subprime crash is giving to federal candidates? Not enough to let her make a profit off her loss, that's for sure. Bank of America, however, will enjoy millions in perks:

So over the first five years, Bank of America can use a total of $1.35 billion of Countrywide's losses to shelter its income. (That's five years of $270 million annual losses.) If Countrywide's embedded losses when Bank of America buys it exceed $1.35 billion, Willens says, the bank will be able to deduct the rest of the losses, without limit, starting in the sixth year.

This is certainly not the first instance we've seen of entities with a chunk of campaign contributions to their credit taking but a rap on the knuckles for their part in the subprime disaster, while ordinary people bear the brunt of the collapse.