Bramwell's Lunch Beat: Transparency Vital for IRS Chief
Volcker Rule’s CDO restrictions prompt push for guidance
Regulators are being urged by US banking industry groups to clarify accounting for certain securities under the Volcker Rule after lenders complained the Dodd-Frank Act measure may force them to take writedowns, Bloomberg reported.
“Community and regional banks would have to take losses at the end of the year because of a provision in the rule limiting their ability to hold collateralized loan obligations and collateralized debt obligations [CDOs],” Cheyenne Hopkins and Jesse Hamilton wrote.
Industry groups, such as the Independent Community Bankers of America and the Financial Services Roundtable, sent letters to regulators earlier this week asking whether the rule requires banks to permanently write down their holdings of CDOs backed by trust-preferred securities – pools of securities issued to raise capital.
The rule – adopted by the Federal Reserve, US Securities and Exchange Commission, and three other agencies on December 10 – was named for former Fed Chairman Paul Volcker and was included in the Dodd-Frank Act as a way to restrict banks’ proprietary trading and other risky bets after the 2008 credit crisis. Banks have until July 21, 2015, to comply, according to the article.
Walk the talk: the IRS needs a chief who supports transparency
Forbes contributor Christopher Bergin wrote on December 19 that John Koskinen, who was confirmed by the Senate Finance Committee last week as the next chief of the IRS, must be dedicated to transparency.
“Why transparency? Because the IRS is increasingly perceived as an organization with a political agenda. Which is potentially disastrous,” noted Bergin. “And transparency is the best way to deal with that danger.”
Bergin cited a memo from President Obama that went out on January 21, 2009, to the heads of executive departments and agencies. In the memo, the president said his administration would be committed to creating an “unprecedented level of openness in government” and would establish a system of transparency.
“So, Mr. Koskinen, if you become the next IRS commissioner, you can begin by walking this administration’s talk,” Bergin wrote. “If nothing else, it would be unique for the current IRS management.”
'Tis the season for health and taxes
Big tax-preparation companies like Jackson Hewitt and H&R Block are offering health insurance checkups during the 2014 tax-preparation season to explain Affordable Care Act options to their customers, many of whom will qualify for federal tax credits to help afford health coverage but may not know it,” Politico reported.
“The way tax firms see it, they’re already doing business with the very folks the Obama administration has been striving to reach – the subsidy-eligible working and middle class,” Paige Winfield Cunningham wrote on December 19. “Obamacare enrollment got off to a dismally slow start in October with all the online sign-up problems amid ongoing political controversy. The administration has a lot of catching up to do to get millions of people covered by March 31, the deadline for avoiding a tax penalty.
“The tax firms were planning their insurance assistance program even before the website rollout flopped,” she continued. “Now they see their efforts as even more necessary.”
How to handle Target’s data breach
Watch and wait. That is the advice security experts are offering Target customers who believe theirs was one of the 40 million credit or debit cards involved in a data breach between November 27 and December 15.
Experts are recommended that people “watch the account you used at the retailer on a daily basis, and wait, because there’s no telling when it will be tapped by thieves,” Mitch Lipka of Reuters wrote on December 19.
One tip for concerned consumers is: Don’t look for crazy, big-ticket charges. Sophisticated hackers are more likely to make small purchases – a $1 charge on 10,000 cards – to check the viability of an account, Yaron Samid, CEO of BillGuard, a company that offers a free service monitoring credit and debit cards for unusual activity, told Lipka.
Credit card users have more protection than those who used a debit card at Target because consumers are protected from the fraudulent use of a credit card.
“Either way, if a fraudulent charge is spotted, consumers should get a new card,” Lipka wrote. “But experts say it’s better to err on the side of caution, and – at least for debit card holders – get a new card now.”
CFPB pushes financial institutions to disclose arrangements with colleges
A number of financial institutions were urged by the Consumer Financial Protection Bureau (CFPB) on December 17 to disclose how much money they are paying colleges and universities to directly market their products and services to students, Tyler Kingkade of the Huffington Post reported.
“Many schools have agreements with financial institutions to push their deposit accounts, prepaid cards, and debit cards on students, in some cases linking an account with the student’s school-issued ID,” Kingkade wrote. “Colleges, in turn, earn money either in a flat fee or based upon how many students open accounts.
“Currently, financial institutions are only required to disclose credit card agreements with schools, meaning that many students do not fully understand these and other financial arrangements, according to the CFPB,” he continued. “Although 69 percent of debit card deals are available to the public, the CFPB said sometimes an open records request must be filed in order to get access.”
Mark Zuckerberg’s staggering tax payments
Facebook CEO Mark Zuckerberg paid an estimated $1 billion in taxes last year, which was considered one of the biggest payments ever. Now, Zuckerberg is selling 41.4 million shares of the social media site worth around $2.3 billion, CNBC reported.
“The company said ‘most’ of the net proceeds will go to pay taxes, which means that over a two-year period, Zuckerberg may be paying between $2 billion and $3 billion in federal and state taxes,” Robert Frank wrote.
But Frank added that Zuckerberg is an extreme example of a dangerous phenomenon: The stock sales of the wealthy account for an outsized share of America’s income taxes.
“And that dependence is growing with a rising stock market and a growing income gap,” he wrote.
Ex-accountant gets seventy months in prison for stealing from Detroit Public Schools
US District Judge Julian Abele Cook sentenced a former Detroit Public Schools contract accountant to seventy months in prison on December 18 for stealing more than $530,000 from the financially strapped district and using the money for personal expenses, the Detroit Free Press reported.
Sixty-year-old Sandra Campbell also was ordered to pay the school district restitution of $530,091.
A jury convicted Campbell and her daughter, Domonique Campbell, a former special education teacher, in August on charges of program fraud conspiracy, money laundering conspiracy, and defrauding the IRS following a five-week trial, the newspaper reported. They were accused of a scheme in which orders for books and other educational materials were placed with their sham company, Definitive Concepts, but never delivered to the schools.