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Politics Cares Act tax breaks for wealthy retirees, Mnuchin curbing Fed lending powers and other business turkeys

20:40  24 november  2020
20:40  24 november  2020 Source:   washingtonpost.com

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Thanksgiving is my favorite American holiday, even this year when my wife and I will have a two-person celebration rather than our traditional gathering because we, our kids and grandkids don’t want to put each other at risk for the coronavirus.

a man wearing glasses: Treasury Secretary Steven Mnuchin. © Toni L. Sandys/AFP/Getty Images Treasury Secretary Steven Mnuchin.

Every Thanksgiving, my wife and I remember how thankful we are that our grandparents left Europe when they did and that the United States took them in.

In addition to that serious stuff, I also get to have some journalistic fun by writing about the business turkeys of the year. As in, “Boy, was that deal a turkey!”

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Treasury Secretary Steven Mnuchin and OCC head Joseph Otting want to overhaul the Community Reinvestment Act , in part based on their experiences running OneWest Bank. In the years since the law’s passage, such lending grew, but so too did a thicket of rules and regulations related to the law.

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I stick to business, financial and tax turkeys because that’s the stuff I write about. I leave political turkeys, of which there’s certainly a bumper crop, to my Washington Post colleagues who write about politics.

So let me show you some of this year’s foul-ups.

How the Cares Act gave millions to energy companies with no strings attached

Helping the non-needy. One of the more wasteful provisions of the Coronavirus Aid, Relief and Economic Security Act, also known as the Cares Act, lets people like me who are 72 and older avoid taking required minimum distributions (RMDs) from our individual retirement accounts this year. We got this tax break — RMDs are federally taxable — because stocks were in the tank when the Cares Act was enacted in March, and Congress worried that forcing older people and people with inherited accounts to sell stock in a down market to take RMDs would sharply reduce their remaining balances. Rather than limiting the RMD exemption to $25,000, as I (and I suspect others) suggested, Congress made the exemption unlimited. As a result, many people like me, who are fortunate enough not to need RMD money to pay their bills, have taken little or nothing in the way of distributions. However, people who need the money to live on have taken distributions and therefore have gotten no benefit from this provision. Meanwhile, stock prices are at near-record levels. So it turned out that many old folk didn’t need any help.

Democrats accuse Mnuchin of sabotaging economy in dispute with Fed

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WASHINGTON—Treasury Secretary Steven Mnuchin declared an impasse in international talks on how countries tax multinational corporations, increasing the odds of an escalating trade and tariff dispute in the midst of a global downturn. Mr. Mnuchin ’s move made the already-fragile talks even

The U.S. has “serious concerns” with proposals being discussed in the global rewrite of corporate tax rules, Treasury Secretary Steven Mnuchin said. In a letter to the Organization for Economic Cooperation and Development, Mr. Mnuchin cited concerns raised by U.S. businesses .

Not helping the needy. Another turkey-esque provision of the Cares Act allows taxpayers who don’t itemize deductions to subtract $300 of charitable contributions ($600 for two people filing jointly) from their 2020 adjusted gross income without having to show that any contributions were actually made. I wonder how much in extra donations this provision has produced for charities — I suspect very little. How much will this provision increase the federal budget deficit? I suspect by quite a bit.

Stomping on Ant. When Jack Ma, the Chinese zillionaire, criticized what he called the “pawnshop” mentality of Chinese banks, it set in motion a chain of events that resulted in the cancellation of a $34.5 billion initial public offering of stock in Ant Group, a fintech firm that Ma founded. Refusing to tolerate criticism is a turkey move that I suspect will hurt the Chinese government much more than it hurt Ma. How so? Because Ma still has plenty of money — but the government stomping on the Ant IPO is likely to make companies and individuals less likely to flock to China to invest their capital.

On The Money: Democrats accuse Mnuchin of sabotaging economy in dispute with Fed | Trump administration proposal takes aim at bank pledges to avoid fossil fuel financing | JPMorgan: Economy will shrink in first quarter due to COVID-19 spike

  On The Money: Democrats accuse Mnuchin of sabotaging economy in dispute with Fed | Trump administration proposal takes aim at bank pledges to avoid fossil fuel financing | JPMorgan: Economy will shrink in first quarter due to COVID-19 spike Happy Friday and welcome back to On The Money, where we're wondering what fast food burger could possibly be worth a 12-hour wait. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line.See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.Write us with tips, suggestions and news: slane@thehill.com, njagoda@thehill.com and nelis@thehill.com. Follow us on Twitter: @SylvanLane, @NJagoda and @NivElis.

Federal Reserve Governor Lael Brainard has been told by allies of President-elect Joe Biden that she should stay at the central bank, according to people familiar with the matter, further dimming odds she’s chosen as the next Treasury secretary. Brainard is the only Democrat on a Fed board filled mostly by

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Frustrating the Fed. Treasury Secretary Steven Mnuchin’s order to the Federal Reserve to send back hundreds of billions of dollars that it has been holding for possible use in emergency lending programs to help the economy is a total economic turkey. Whether it’s a political turkey — or a politically motivated turkey — is for others to say. But one thing is clear: If you care about our country and the millions of mostly lower-income people being economically ravaged by the coronavirus and its side effects, you don’t do what Mnuchin is trying to do. Especially given that the Fed, which has no political ax to grind that I know of, is objecting publicly.

Wealthy retirees got a tax break from the coronavirus relief bill

Citi’s $900 million miscue. Because of a computer hiccup, Citibank sent some Revlon creditors about $900 million rather than the $9 million or so of interest that it should have sent them. Some recipients gave the extra money back. Others are in litigation. It’s a total turkey. I hope that someday I get to gobble up 100 times what I’m owed. Not likely, however.

Wirecard’s wild bookkeeping. This is another funny story, unless you happened to work for Wirecard, a German-based online payment firm, or owned stock in it. Or were part of the Ernst & Young crew that was supposedly auditing it. Wirecard, once a hot stock, now a disaster, engaged in financial fantasy for years but was finally forced to admit that about $2 billion of the cash that it carried on its books didn’t exist.

There are numerous turkeys I haven’t gone into, such as Vanguard sending wrong information to clients about money market fund yields.

But I’ll end here by wishing you and yours a happy and healthy holiday regardless the size of your Thanksgiving gathering. Or whether we agree about anything in this column or in my other Post columns. Take care, be well, stay safe.

Mnuchin faces grilling over shutdown of CARES Act loan programs .
Mnuchin faces grilling over shutdown of CARES Act loan programs In his opening statement, Sen. Sherrod Brown, D-Ohio, excoriated Mnuchin, claiming it would further damage the staggering economy.

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This is interesting!