Wall Street Settlements - Infographic

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  1. 1. J ustioe Department Collected a Record $25 Billion in Penalties in FY 2014In return for engaging in risky mortgage lending that NOTASINGLEplunged the economy into crisis,all 6 major banks havebeen allowed to settle out-of-court payments to clear up I ' has bee-n Lthe charges of wrongdoing i: ri; minal; lyj I proseCu. tetThat's Not the Best Part. .. 1 SW19 210708-Those jfiries" are largely tax t/ 0/l/ lClll7l. / Penalty DednotianReward far Swangdoing(Er Incentive For More) 7/ W Penalties 8 4 Fines to the 1 Government Q Are Non- oh Deductible PIKorporate lawyers A corporation willI and federal] . . .. .deduct payments regulators ,from its taxes unless---- .ai. 'idi1ii: iZ" settlements that ,settlementfaII" to mentlor) I agreement penalty status'IIRD| NARY BUSINESS EXPENSESBig Banks will receive deductions against the corporate tax covering between 1/ 2-3/4 of their settlements/ -'lOUl'lt in lions ($) Q DE (I I Q_ _ _ _ .l :_-DUCT I Pure Bank_of ,IBLE penalty :America I payable to :$17b US : - ' ' - Settlement Treasury I - - - .. - State and _ .federal civil Consumer :ClamsReliefDThe DOJ has never given a good explanatioor why it has allowed tax- deductible settlements in those cases. Because there isn't one. Final Penalties A Drop in the Ocean5,_, I,; ?, L,E, ?,, ,e*. ;,*, "ei; ,'; he ) Compared to Bank Profits. .. Crisis 100 T,90 $143.2 80 Billion 7050 Amount in ( 50 billions ($)40 inf ti il Total ReVem-le of Bank Goldman BOA JP Morgan Industry In Last Quarter I Settlement I Quarterly Revenue Annual Revenue In the quarter immediately following the DOJ settlements,these banks all saw their revenues and share prices rise,contributing to record-setting profits for the whole banking industry over the past two years. ..and Bank-Induced losses to the ll. S. EconomyAfter tax deductions,majorThe 2o07'20o9 bank settlements with the fln3nCl3l C| 'l5l5 IS government cover at most estimated to have cost That tin) dt I5 the $6-14 trillion in lost A total amount that all economic output .6 major banks paid in 0direct penalties to 0F 40-90% Of GDP V the government .. .. ..of losses to the US.economy -0from the financial crisis I NonDeductib| e Penalties I All Settlements I Federal BailoutFinancial LossThose 'historic" settlements no longer seem so big after all-I- 00 OQ---IOrdinary Americans are left to pay for corporate wrongdoing. ..TW| CE! #1 AsVictims5Millions of Americans suffered bankruptcies,foreclosures,evictions and layoffs in consequence of the banks' wrecklessness#2 As Tax SubsidizersTaxpayers must make up the lost government revenue from corporate tax breaks through tax hikes,spending cuts or deficit increasesWhen America's most profitable companies pay less,America's taxpayers pay more. It's that simple. *1 'Total potential tax savings collected onSettlements for Enough to fund the Consumer wrongdoing related to Financial Protection Bureau in the financial Crisis charge of preventing thesecorporate harms for 20 yearsWhat can We Do About This?Lots! Standardize the tax Make punitive settlements treatment of settlements non-deductible by defaultPrchibit tax Write-Offs , _ Require corporations to (and rewards) Of .justify deductions on theirpunitive settlement r e r , tax SEC tax filings _____P.3_Y. "3e_'T_-__. 'Require all parts of a ' .A Improve inter-agengy settlement to be labelled communication andeductible or non- Q"eS"" the headline coordination of settlementdeductible tax treatmentDetermine the after-tax,non-deductible portion of settlementsDemand greater accountability and punishment for corporate wrongdoingDon't (Just) Get Mad.Get Informed. Learn more at:http: //uspirg. org/ issues/ usp/ no-tax-deductions-wrongdoing