When is a loss an asset?

The Banks are now lobbying against corporate tax cuts. Why?

Follow this: The banks lost billions in the financial scandal. Citibank lost $50 billion. The other large banks lost $20-$30 billion. Because the banks can use these past losses to offset future income tax payments, they list these losses as "Assets" on their balance sheets.

The losses are based on assuming a corporate tax rate of 35%. If the tax rate is reduced to 20%, the banks would have to decrease the value of these assets proportionately. For example, CitiBanks $50 billion asset would now be worth only approximately $28 billion - an asset decrease of $22 billion. Of course their profits/shareholders would benefit from a smaller corporate tax rate, but their ability to borrow from the Fed is dependent on their assets on their balance sheet so a reduction in a corporate tax rate, which decreases their balance sheet assets, actually reduces their Fed borrowing ability. Go figure that one.

Hence, they are effectively lobbying against a corporate reduction in tax rate or a friendly change in the associated rules that would allow them to have their cake, ice cream and cookies too.

Banks are amazing institutions of the American system. I wish I owned one.