Must Be Nice Being Citigroup
Man, is Citigroup having a nice month, or what? Well, at least in America they are.
Just a day after announcing that they’re going to be paying off their bailout loan with the federal government (I don’t know why I’ve been refusing to use TARP, but bailout just sounds more like what it was) comes an announcement from the Internal Revenue Service (IRS) that Citigroup will benefit from a bunch of tax breaks.
Not that they don’t need the money, but what a sweet deal this is. Citigroup is getting a multibillion-dollar tax break, based on some rules the IRS passed earlier this year to help out companies that received bailout money. In essence, they don’t have to pay any taxes whatsoever because they were partially owned by the government for a long period of the year. The idea was that by not making these companies pay taxes, it would help the stock price stay competitive and shareholders wouldn’t bail on them because of government intervention.
A spokesperson for the Treasury, Nayyera Haq, said :This rule was designed to stop corporate raiders from using loss corporations to evade taxes, and was never intended to address the unprecedented situation where the government owned shares in banks. And it was certainly not written to prevent the government from selling its shares for a profit.”
Wells Fargo is getting this same deal, and more, because they also don’t have to pay taxes on the acquisition last year of Wachovia; remember that deal?
Anyway, all wasn’t good news, as the Abu Dhabi Investment Authority decided to sue Citigroup in England for money it pumped into the bank in trying to shore it up before it needed to be bailed out. They’re claiming Citigroup fraudulently misrepresented their positive standing before it all came crashing down. Speculatively, there’s a possibility that this could take a chunk out of the money Citigroup, was hoping to pay the government back with.
Sometimes, if it’s not one thing, it’s another.