Liberal advocacy groups are mounting pressure on the Justice Department to bar JPMorgan from deducting from the bank’s taxes any portion of a broad government settlement in the works.
The reportedly $13 billion settlement over the bank’s mortgage activities before the financial crisis, which is still being hammered out, would be the largest such settlement in U.S. history. But reports that JPMorgan is seeking use up to $4 billion of the settlement as a tax write-off has led to protests from liberal groups and lawmakers.
On Monday, two groups delivered over 160,000 petitions to the Justice Department calling for barring any potential tax benefit. The groups, U.S. PIRG and Americans for Tax Fairness, argue it is patently unfair for taxpayers to help subsidize JPMorgan’s fines through the tax code.
{mosads}“The American people were already victimized once by Wall Street’s malfeasance. They should not be victimized again by having to pick up more of the tab,” said Frank Clemente, campaign manager for Americans for Tax Fairness. “The Obama administration should be helping homeowners with underwater mortgages, not be giving tax breaks to the banks that put them there.”
The potential tax perk has also attracted attention on Capitol Hill. Five U.S. senators wrote to Attorney General Eric Holder Tuesday, urging him to explicitly prevent any tax writeoffs under the settlement. That letter was signed by Sens. Mazie Hirono (Hawaii), Bill Nelson (Fla.), Martin Heinrich (N.M.), Sheldon Whitehouse (R.I.) and Elizabeth Warren (Mass.).
In the House, Reps. Peter Welch (D-Vt.) and Luis Gutierrez (D-Ill.) introducing legislation barring companies from using the tax code to deduct costs from government settlements, and Welch also sent a letter to the bank’s chief executive, Jamie Dimon, urging him to avoid the writeoff.
While the bulk of the settlement is still being finalized, the Federal Housing Finance Agency announced in October it had struck a $4 billion settlement with the bank, after it charged JPMorgan broke securities laws when it sold securities loaded with risky mortgages to Fannie Mae and Freddie Mac.