Treasury Notice 2008-83 went virtually unnoticed as the government rushed to cope with the emerging financial crisis in September. And that seems to have been the point. With no public discussion, the Treasury Department gave banks a huge chunk of money ”” as much as $140 billion, by one estimate ”” by changing a tax law that had been in place, and the subject of relentless lobbying, for 22 years.
Even by today’s deficit-be-damned standards, that’s a lot of your money. It’s the size of the economic stimulus plan President Bush proposed last winter. It would repair and modernize all of America’s bridges. And it’s on top of the $700 billion financial rescue plan approved by Congress.
Tax regulations are hideously complicated, but the gist of Notice 2008-83 is that it lets healthy banks buy weak ones and take big write-offs for the weak banks’ losses. At least three banks have already taken advantage of the change. So taxpayers are funding their growth, and unlike other aspects of the bailout, they will get no return.