Goldman Sachs Group Inc. (NYSE:GS) can never catch a break. The bank that everyone in Washington and on Main Street loves to hate may be attempting to help government ward Fannie Mae (NYSE:FNM), but that has not stopped controversy from ensuing because the plan would also help the bank cut its tax burden.
The Wall Street Journal reports that Goldman is in talks to buy millions of dollars of tax credits from government-controlled mortgage giant Fannie Mae, but the potential deal is running into opposition from the U.S. Treasury, which could block the sale.
The Journal wrote:
A sale would bring some needed financial respite to Fannie Mae. But the administration is leery about approving a deal that would help Goldman reduce its tax bill, given the animus held by many lawmakers toward big Wall Street firms in general and Goldman in particular. The Obama administration is looking at the deal with a critical eye and could block it. Goldman, meanwhile, is hopeful it could win approval this week.Financial firms that fund low-income housing projects receive tax credits, which can be used over 10 years. Evidently Fannie Mae loaded up on credits during the boom, but no longer has a need for them since it is still bleeding, having lost $37 billion in the first half of 2009. Now it is attempting to sell $5.8 billion in credits for cash.
In order for the Goldman purchase to receive a nod from the Obama administration, Treasury must structure the sale in such a way that it won't cost the American taxpayers money, or better yet, reduce some of their burden in propping up Fannie Mae, which has received $96 billion in government aid. -
Matthew Wurtzel
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