A few days ago I wrote a post implying that Bank of America was committing yet another subprime folly in buying Countrywide. Turns out nothing could be further from the truth. As John Aravosis points out at Americablog, it’s all just a clever way of getting the American taxpayer to subsidize the losses.
The trick is that the Bank of America will get to avoid taxes by writing down the losses it has inherited from Countrywide. One would think that in any rational system of taxation, it would assume that the losses would be reflected in the purchase price, and that allowing deductions on such losses in effect confers a double benefit on the purchaser. But who ever said we had a rational system of taxation. Don’t try this at home, by the way. Only large corporations need apply.
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