Theregards the lenders' compensation to homeowners as a cost incurred in the course of doing business. Result: It's fully tax-deductible.
Critics argue that big banks that were bailed out by taxpayers during the financial crisis are again being favored over the victims of their mortgage abuses.
"The government is abetting the behavior by not preventing the deduction," said Sen. Charles Grassley, R-Iowa. "The taxpayers end up subsidizing the settlement die down. That's unfair to taxpayers."banks after the headlines of a big-dollar
Under the deal, 12will pay more than $9 billion to compensate hundreds of thousands of people whose homes were seized improperly, a result of abuses such as "robo-signing." That's when banks automatically approved foreclosures without properly reviewing documents.
Regulators reached agreement this week withand Morgan Stanley. Last week, the regulators settled with 10 other lenders: , JPMorgan Chase, Wells Fargo, Citigroup, MetLife Bank, PNC Financial Services, Sovereign, SunTrust, U.S. Bank and Aurora. The settlements will help eliminate huge potential liabilities for the banks.
Many consumer advocates argued that regulators settled for too low a price by letting banks avoid full responsibility for wrongful foreclosures that victimized families.
That price the banks will pay will be further eased by the tax-deductibility of theirsettlement costs.