TARP Banks Actually Denied SomethingNovember 3, 2009 - by Donny Shaw
Earlier this week, the federal government stood by and watched as TARP-recipient CIT Group went bankrupt. The Treasury might have sunk a couple billion taxpayer dollars in the deal, but it was a sign that there might be an end to the Wall Street bailout — at least for second tier financial company that no longer seem “too big to fail” now that the fog of economic crisis has lifted a bit.
But here’s another small sign that the TARP banks might not be getting anything they want anymore. In May, I blogged about the banks’ lobbying efforts to convince Congress to let them get in on a stimulus program that would allow them to get instant refunds on taxes paid on past profits for up to five years back, or “carry-back” relief. They were arguing that allowing TARP banks to get carry-back relief would "represents sound policy and would best speed economic recovery.”
Yesterday the Senate voted to amend the carry-back program and they did not let the TARP banks in. The amendment they approved, which is being attached to the unemployment extension bill (H.R. 3548), specifically exempts them.
(f) Exception for TARP Recipients.—The amendments made by this section shall not apply to—
(1) any taxpayer if—
(A) the Federal Government acquired before the date of the enactment of this Act an equity interest in the taxpayer pursuant to the Emergency Economic Stabilization Act of 2008,
(B) the Federal Government acquired before such date of enactment any warrant (or other right) to acquire any equity interest with respect to the taxpayer pursuant to the Emergency Economic Stabilization Act of 2008, or
( C) such taxpayer receives after such date of enactment funds from the Federal Government in exchange for an interest described in subparagraph (A) or (B) pursuant to a program established under title I of division A of the Emergency Economic Stabilization Act of 2008 (unless such taxpayer is a financial institution (as defined in section 3 of such Act) and the funds are received pursuant to a program established by the Secretary of the Treasury for the stated purpose of increasing the availability of credit to small businesses using funding made available under such Act).