Fortune's Allan Sloan explains how taxpayers will help pay for Bank of America Corporation (NYSE: BAC)'s acquisition of Countrywide Financial Corporation (NYSE: CFC) in a column on Fortune.com.
Basically, the robustly profitable (those overdraft fees have to go somewhere!) BofA will be able to use Countrywide's losses to offset its own income. One tax expert told Sloan that the acquisition could save the company half a billion dollars in taxes over the next 5 years, and considerably more after that.
So let me get this straight: Countrywide CEO Angelo Mozilo is getting a $100 million plus severance package for dumping stock while running his company into the ground and then dumping it to Bank of America at a tiny fraction of its previous high -- and part of the deal is essentially being financed through tax savings for Bank of America.
Given that taxpayers, you and me, will essentially be paying for this in the form of lower taxes for Bank of America (shifting the tax burden to other people), I think I'm entitled to at least as much of a bonus as Mr. Mozilo. But I'm not greedy, so I'll be happy to settle for an even $50 million.
If you're a Countrywide FInancial executive and you have my check ready, leave a comment and I'll be in touch.
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Reader Comments (Page 1 of 1)
1-14-2008 @ 10:50PM
Tracy Coenen said...
I think articles like the one you cited make the tax savings look like something it's not. When there are tax losses, someone benefits. If Countrywide had stayed on its own, it could use those losses to offset future profits, and therefore they get what looks like a tax advantage. Because Bank of America is buying Countrywide, they get the benefit of using the losses to offset profits. There's nothing sinister or underhanded about it, and one way or another, those losses would have been used against a company's profits to reduce taxable income. It's just the way the tax laws work.