Sen. Brown calls for the end of tax breaks for bank settlements

Sen. Sherrod Brown (D-Ohio) called on federal regulators Thursday to cancel tax breaks for big banks involved in a settlement deal on unlawful foreclosures.

A settlement was reached earlier this month requiring 10 financial institutions to pay $8.5 billion to homeowners who were hurt by the mortgage crisis through unlawful foreclosures or mortgage servicing abuses, but Brown said that wasn't enough.

In a letter to Federal Reserve Chairman Ben Bernanke and Comptroller of the Currency Tom Curry, Brown urged them to end tax deductions the banks would get from claiming expenses related to the legal settlements.

"It's unacceptable that these Wall Street banks can write off these mortgage settlements, shifting the cost to taxpayers," Brown said Thursday. "Banks that take a family's home because of errors or fraud should not get a tax deduction and a slap on the wrist. Breaking the law should not be a business expense."

Under current law, companies are able to deduct the full value of any settlement payouts from their federal taxes.

"I urge you, the Justice Department, and the other financial regulators to adopt the practice employed by the Securities and Exchange Commission (SEC), which prohibits companies from deducting settlement costs as a business expense," the letter stated. "This rule should apply to this settlement as well as any future settlements with financial institutions. For too long, too many have treated breaking the law as a cost of doing business. It is not."

Brown said the $8.5 billion settlement would help about 96,000 Ohioans.

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