House Dems Find 13 Bailout Recipients Owe Back Taxes -- After Telling Treasury They Didn't
Just when you thought it was impossible to find more proof of the bungling of the bailout ... Rep. John Lewis (D-GA), chairman of the House Ways and Means oversight subcommittee, announced this morning that his panel had found 13 of the top 23 recipients of TARP owing the government $220 million in back taxes.
Making matters worse was the fact that any company getting TARP aid had to certify to the Treasury Department that they didn't owe back taxes before getting their share of the bailout, as Lewis explained. It appears that Treasury took the bailed-out businesses at their word rather than asking to actually see their tax records.
If there's any doubt remaining that Congress would not approve any more spending on the financial rescue, Lewis' opening statement this morning should put it to rest:
Taxpayers have no sense that there is any control over this money. They have no idea what, if anything, they will get in return. This entire program is based on trust - trust in the givers and trust in the takers. At this point, there is no trust.To get money from Treasury, banks and others must sign a contract that states they have no material unpaid Federal taxes. Treasury did not ask these banks and companies to turn over their tax records. Treasury relied on the signed statements when it agreed to invest billions of taxpayer dollars. When you or I go to the bank to take out a mortgage to buy a house, we are asked for our tax returns. They're not going to just take our word for it, and we are not asking for millions of dollars.
The Subcommittee looked at the top 23 TARP recipients. We found that thirteen of them owed more than $220 million in unpaid Federal taxes. Two companies owe over $100 million each. How can this be? If we looked at all 470 recipients, how much would they owe?
Are they signing contracts knowing that they owe taxes but thinking they will not get caught? Did then-Secretary Paulson turn a blind eye? Either way, this is shameful. It is a disgrace. The American people are fed up, they are fired up, and they're not going to take it anymore. As members of Congress, we shouldn't take it anymore either.
Josh
Matt
Eric
Brian
Does anyone else find it silly to think that we shouldn't give a company billions if they owe us millions? What if my friend came to me and said he desperately needed 100 dollars and I told him "nope, you still owe me a dollar"?
March 19, 2009 11:17 AM | Reply | Permalink
Not quite the right question. The analogous question really is, would you trust him to repay the 100 (or, let's say, to spend it on what he said he needed it for rather than on booze and cigarettes) if you discovered he had lied to you about having paid back the 1?
March 19, 2009 11:20 AM | Reply | Permalink
I'm not defending them, I'm just saying it seems like a silly requirement in the first place.
March 19, 2009 11:33 AM | Reply | Permalink
Lewis is not an idiot. He knows that the real significance is what I pointed out, and not the relatively trivial amount of money itself. It's simply a proxy for the fact that we've been shoveling huge amounts of money into these companies without getting any control, transparency or accountability in return. As well as being foolish, that has become politically unsustainable.
March 19, 2009 11:37 AM | Reply | Permalink
'silly requirement..'
..blmack-is that like Monty Python's Ministry of Silly Walks?
US Code, Silly Section
Part 1. Financial banks and businesses getting government money need not know whether they have paid taxes, and MAY AFFIRM THAT THEY OWE NO TAX, as long as the amount not paid is NOT OVER $100 million, or less than 1/100 of the amount of taxpayer bailout money they receive due to insolvency caused by negligence, fraud or gambling on CDO's or pure greed.
Part 2. Citizens or students who apply for government guaranteed mortgage or student loans who owe taxes will be denied loans, and cited for fraud if they submit fraudulent claims on applications.
March 19, 2009 12:19 PM | Reply | Permalink
Lending your own money to a friend is one thing. Lending taxpayer's money to your friends is something different.
Especially when you and your friends can't get loans right now, even though you do pay them back.
March 19, 2009 11:25 AM | Reply | Permalink
What if you friend's situation effects the whole friggin world?
March 19, 2009 11:29 AM | Reply | Permalink
Hmmm....financial armeggeden.
Why wouldn't people who truly understand that it might happen freely give up their bonuses for the good of the world in that case?
Who would be so greedy as to let their own millions stand in the way of such a catastrophic disaster (which they had a big hand in causing)?
March 19, 2009 11:43 AM | Reply | Permalink
I'm certainly not going to argue that the AIG folks who collected their bonuses are not greedy scumbags...
March 19, 2009 11:54 AM | Reply | Permalink
I didn't say I agreed with giving them the billions. I'm just saying that given the fact that we ARE giving them billions, why are we worried about the millions. What, if we would have know about he 120 million owed, would we have just given them 699.88 billion instead of the 700 billion?
March 19, 2009 11:38 AM | Reply | Permalink
$700B to $220M is 3500:1 so if your friend owes you a dollar, in this case they'd be asking for $3,500.
March 19, 2009 11:26 AM | Reply | Permalink
Walter Mitty and blmack have proven they can count zeroes, and they know the difference between billion and million.
The question is whether the financial firms involved in the bailouts are as also as capable at accounting.
March 19, 2009 12:37 PM | Reply | Permalink
Sounds like the issue is not so much that the taxes are a small percentage of the bailout, but that these guys lied to Congress.
Of course, Congress has made it pretty clear over the past few years that lying to them has no consequences, other than perhaps another strongly worded letter.
I'll believe otherwise when I see Vikram Pandit arrested for perjury.
March 19, 2009 1:30 PM | Reply | Permalink
The problem isn't that these companies owed back taxes. The problem is that these companies swore that they DIDN'T owe the taxes and the Paulson Treasury Department didn't demand proof. It doesn't have anything to do with owing money--that's why they're borrowing in the first place. It's all about morals and ethics. Sadly, these businesses have neither.
March 19, 2009 3:40 PM | Reply | Permalink
We're talking about the $700B TARP bailout right? And folks are grandstanding about $220M?
And considering 13 owed $220M and two companies owed $100M each, that means the other 11 companies owed $20M between them? or less than $2M each on average?
This is long past getting ridiculous.
March 19, 2009 11:21 AM | Reply | Permalink
If it provides the political cover for Congress refusing to fund further bailouts, I'm all for it. It's time to stop propping up the crooks and snake oil salesmen. Take over the insolvent institutions, fire their managements, break them up and reprivatize the viable parts. As should have been done from the getgo.
March 19, 2009 11:24 AM | Reply | Permalink
So you believe to big to fail is just a marketing slogan? You want economic Armageddon because you're pissed off?
March 19, 2009 11:28 AM | Reply | Permalink
I didn't say let them fail. Please learn to read with some modicum of understanding.
March 19, 2009 11:30 AM | Reply | Permalink
Agreed. I actually am getting tired of the back taxes thing in general. The whole economy is melting down and the government is shelling out trillions of dollars to try to prevent a more catastrophic calamity and we are talking about a few pennies in taxes in comparison? Give me a break. I'm tired of the political grandstanding by some dems of all people. Shut up about taxes already. Who cares?
March 19, 2009 11:36 AM | Reply | Permalink
I care!
I'm curious if anyone has an educated guess of what laws if any, those companies have run afoul of.
Breach of contract?
Fraud?
Perjury?
Who did the actually enter into the contracts with?
I care because this could net a perp-walk, or maybe a couple.
March 19, 2009 12:00 PM | Reply | Permalink
The perp walk and fraud and criminal activity are whole other issues. I agree with that and care about that.
This tax thing is political grandstanding and causing more harm than good. It's chump change compared to the grand scheme of things. Let's just deal with the problems, not politically grand stand. The indictments can come later when the economy is on the rebound.
March 19, 2009 12:25 PM | Reply | Permalink
A couple hundred million in unpaid taxes or bonuses may be small potatoes in the overall scheme of things, but those who dismiss it fail to understand what is at the core of people's outrage.
These guys really FU and got bailed up. And they still get a pass. They do not have to play by the rules. People are expecting some sort of change. If they see that these huge companies can have their way and bend and break every rule, and still get all of our money, there will be no confidence that they do not control congress and the administration.
March 19, 2009 11:36 AM | Reply | Permalink
How many Obama appointee candidates got sunk by or harassed about back taxes owed?
March 19, 2009 12:07 PM | Reply | Permalink
More media jibberish. If the companies FAIL no one will receive any money INCLUDING the IRS.
March 19, 2009 11:37 AM | Reply | Permalink
Oh please! They'll be giving more money.
March 19, 2009 11:38 AM | Reply | Permalink
Of course they will- no matter how it's done this will cost a shit-ton of additional money before it's over. The question is HOW the money is spent. It should be spent absorbing the losses from bad assets AFTER these companies are nationalized and their worthwhile bits sold off. NOT spent to prop them up in their current zombie form, and with the crooks still looting them.
March 19, 2009 11:40 AM | Reply | Permalink
Most large companies in the US could be said to "owe" back taxes. Companies that are currently under audit by the IRS most likely have some issues in dispute that might (or might not) cause them to owe taxes.
I would like to see more details on what is actually "owed". If it's items that are currently under audit, then there is no reason to villify these companies. Large companies usually have several years of open audits in various stages of dispute, and it's not fair for them to have to concede the audit to qualify for bailout money.
Frequently the items in dispute are genuine disagreements with the IRS, and it is rare for a company to be openly avoiding legitimate taxes. For example, the IRS might disagree with a company on the amounts paid for the company cafeteria - the company might say it is fully deductible, the IRS might be wanting to limit the deduction. There is a legitimate disagreement and not an attempt to evade taxes.
The atmosphere around the banks is approaching lynch-mob mentality where people are becoming angry without any attempt to understand the situation. I was hoping we could be smarter than that.
March 19, 2009 11:46 AM | Reply | Permalink
I believe the lynch mob mentality,unfortunately, is about understanding the problem and having no recourse. It was hard to watch congress accept Ed's (of AIG fame) suggestion bonuses were paid to prevent "talent" from leaving.
Could BETTER talent possibly be found? In the words of SP, "You betcha!" Even Ed said there were others but they would be too dumb to catch on quick. BS. With only a tiny bit of background with a shady lending outfit, I bet I could open the first folder and start to spot the fraud right away. BTW, what interest would the people have in exposing their own fraud? Oh yeah. And why would they not reveal a possible tax problem when explicitly asked? If it is so unimportant why not 'fess up.?
March 19, 2009 12:58 PM | Reply | Permalink
Dang, I was running for my pitchfork and you stopped me dead in my tracks! It is so hard for me to step back and look at the big picture. It is a lot easier to start squawking immediately and pointing fingers then to think. While the greed of these money men playing games with other peoples money is absolutely breathtaking and from my very low altitude, mind-boggeling, I do think keeping the whole economy together is more important than satisfying my need for revenge. Thanks for the word to step back.
March 19, 2009 1:14 PM | Reply | Permalink
The degree of arrogance and corruption extant in these companies is breath-taking. While we may need to do the bailouts to keep the financial world from collapse, it seems to me that what Congress should be doing now is noting everything and crafting legislation to severely regulate these businesses in the future. And when the wealth protectors in Congress and the corporate lobbyists scream that it's socialist and un-American to regulate (and they will!) all of their sins should be regurgitated over and over, MoveOn and other progressive organization should rally the troops, and individuals should demand the legislation of their representatives.
To paraphrase the rightwing's favorite riposte: "If you want unfettered capitalism, move to Russia."
March 19, 2009 11:49 AM | Reply | Permalink
Will this quash the freeper meme that Democrats are all tax cheats? Let's hope so.
March 19, 2009 12:45 PM | Reply | Permalink
Wouldn't it be great if these companies were told to bring in new talent and train them properly or face the fraud charges they should be facing anyway?
March 19, 2009 1:02 PM | Reply | Permalink
It looks like the dems and reps are having an outrage contest. I have to say, John Lewis' entry into the contest is pretty good. On the other hand, it strikes me that it's all a tempest in a teapot since both of the big parties need big financial corporations so that they can rake in big campaign contributions and other gratuities.
Heh. The taxpayers are watching - look busy, fellas!
March 19, 2009 4:15 PM | Reply | Permalink