WASHINGTON, Nov. 10 (UPI) -- The U.S. Treasury Department, as Wall Street was in crisis, made a tax policy change that created a bank windfall of up to $140 billion, observers said.
Lawmakers, who said they were unaware of the change for several days, are trying to determine whether the notice was introduced to benefit specific banks and whether it improperly accelerated bank takeovers, The Washington Post reported Monday.
Section 382 of the tax code, a provision that limited a type of tax shelter from corporate mergers, was changed to allow some banks to keep more money by lowering taxes, Andrew DeSouza, a Treasury spokesman, told the Post,
The spokesman said administration had the legal authority to issue the Sept. 30 notice, which he described as a way as a way to help financial institutions during an economic crisis.
Tax lawyers interviewed by the Post -- including several representing banks that could profit handsomely from the change -- were split on whether the Treasury had the authority to issue the notice.
U.S. Sen. Charles Grassley, R-Iowa, the ranking minority member on the Senate Finance Committee, pushed for an explanation from the Bush administration, congressional aides told the Post.
Grassley and fellow committee member Sen. Charles Schumer, D-N.Y., publicly expressed concerns about the notice.
"Congress wants to help," Grassley said. "We also have a responsibility to make sure power isn't abused and that the sensibilities of Main Street aren't left in the dust as Treasury works to inject remedies into the financial system."