News Release

Sign-On Letter to Department of Justice on JPMorgan

74 Groups Tell DOJ: No Write Offs for Wrongdoing
For Immediate Release

Attorney General Eric Holder

U.S. Department of Justice

950 Pennsylvania Avenue, NW

Washington, DC 20530

 

Dear General Holder:

The 74 organizations below applaud efforts of your department and allied agencies to impose some accountability on the faulty mortgage lending practices of big banks, which was a major cause of the 2008 financial crisis that triggered the worst economic downturn since the Great Depression. As your enforcement actions unfold, it is important that the American people—already victimized once by Wall Street’s malfeasance—not be forced to pick up more of the tab.

That’s precisely what would happen if the banks responsible for the crisis are allowed to deduct from their taxes any part of the payments they make in settlement of the claims against them by the federal government.  Therefore, we urge you to include in agreements reached with any parties a prohibition against deducting any portion of the settlement payments.

Media reports indicate that JPMorgan Chase & Co. is on the verge of reaching $13 billion in settlements with federal and state prosecutors over faulty mortgages the company and its subsidiaries packaged and sold. (Five billion dollars related to that amount has already been included in a settlement reached with the federal government’s home financing regulator.)  It has also been reported that JPMorgan could get a tax break of around $4 billion by deducting the settlement costs from its tax bill.

As you know, the tax code prohibits tax deductions for fines or other payments “to a government for the violation of any law.”  But payments that are viewed as compensatory or remedial are considered a cost of doing business and are therefore deductible.  Even payments that sound as if they are penalties or fines can be claimed as remedial and thus eligible for a tax deduction. It all depends on how the settlement is worded and how the I.R.S. interprets that wording.

The government can prevent defendants from shifting part of the cost of their wrongdoing onto other taxpayers by specifically forbidding it in the settlement agreement. The Securities and Exchange Commission (SEC) did just that in a $550 million settlement with investment bank Goldman Sachs in 2010. (In fact, in 2003 the SEC instituted a policy requiring that its settlements must include language making it clear that payments are a penalty and therefore should not be tax deductible.) There was a similar provision in the federal government’s $4 billion criminal settlement with BP over the Gulf oil spill

Wrongdoers should bear the full cost of their malfeasance and not be allowed to get a tax break. That’s not only fair, but also acts as a better deterrent to future wrongdoing and saves the government precious taxpayer dollars.  Therefore, we urge you to include in any settlement agreement reached with JPMorgan or other firms responsible for the Wall Street meltdown a prohibition on deducting the settlement payments from their taxes.

Sincerely,

9to5

Action for the Common Good

AFL-CIO

Alliance for a Just Society

Alliance for Retired Americans

American Federation of Government Employees

American Sustainable Business Council

Americans for Democratic Action

Americans for Financial Reform

Americans for Tax Fairness

Campaign for a Fair Settlement

Campaign for America's Future

Center for Biological Diversity

Center for Effective Government

Community Action Partnership

Community Organizations in Action

Consumer Action

Croatan Institute

Demos

Domini Social Investments LLC

Green America

Jubilee USA Network

National Association of Neighborhoods

National People's Action

New Rules for Global Finance

Oblates of Mary Immaculate

OWL-The Voice of Midlife and Older Women

Progressive Asset Management

Progressive States Network

Progressives United

Public Citizen

Rebuild the Dream

Responsible Wealth

SAFER

Strategic Counsel on Corporate Accountability

Tax Justice Network

The Arc

The Every Child Matters Education Fund

The Sustainability Group At Loring, Wolcott & Coolidge

United for a Fair Economy

US Public Interest Research Group

USAction

Working America

 

State Organizations

 

Arizona
American Federation of State County & Municipal Employees Local 2960

California
California Reinvestment Coalition

Connecticut
ConnPIRG

Delaware
Delaware Ecumenical Council on Children and Families

Florida
United Chinese Association of Florida

Georgia
Georgia Rural Urban Summit

Georgia
Georgia Student Justice Alliance

Georgia
MoveOn.org (Atlanta Council)

Georgia
MoveOn Gwinnett County (Georgia)

Idaho
Idaho Community Action Network

Illinois
Housing Action Illinois

Illinois
Woodstock Institute

Iowa
Iowa Citizens for Community Improvement

Kansas
Kansas AFL-CIO

Massachusetts
Massachusetts Peace Action

Michigan
UAW Local 6000

Nebraska
Sisters of Mercy West Midwest Justice Team

New Jersey
NJ State Industrial Union Council

New Mexico
New Mexico Voices for Children

New York
Central New York Citizens in Action, Inc.

New York
Fiscal Policy Institute

New York
New Economy Project

North Carolina
Action NC

Oregon
Oregon Action

Pennsylvania
Philadelphia War Resisters League

Texas
Neverland Designs

Texas
Texans United To Amend

Texas
TexPIRG

Washington
WA State Chapter NASW

Washington
Washington State Labor Council, AFL-CIO

Wisconsin
Institute for Wisconsin's Future

 

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