10-09-2015, 03:59 PM
Ehhh, I think it's more properly viewed as instituting a tax rather than ending a subsidy, because what's actually happening is the govt/Fed saying "we're going to pay you a lower interest rate on the money we've forced you to lend us".
As the WSJ points out, the member banks are legally mandated to capitalize the Fed. This stock is essentially worthless, because they can't sell or trade it or even borrow against it. That capital is money they would otherwise lend out and earn a return on, so the dividend was always recognized as a modest return on that "investment".
I don't really have an issue with it. Just laughing at how any time Washington wants to increase corporate taxes, they try to obfuscate the issue by couching it in terms of ending "handouts, welfare and subsidies" - none of those terms are very accurate, when someone is already paying taxes the practical reality is simply lowering or raising their taxes. Only in the bizarro world of Nancy Pelosi is taking LESS money from me equivalent to giving me a handout.
As the WSJ points out, the member banks are legally mandated to capitalize the Fed. This stock is essentially worthless, because they can't sell or trade it or even borrow against it. That capital is money they would otherwise lend out and earn a return on, so the dividend was always recognized as a modest return on that "investment".
I don't really have an issue with it. Just laughing at how any time Washington wants to increase corporate taxes, they try to obfuscate the issue by couching it in terms of ending "handouts, welfare and subsidies" - none of those terms are very accurate, when someone is already paying taxes the practical reality is simply lowering or raising their taxes. Only in the bizarro world of Nancy Pelosi is taking LESS money from me equivalent to giving me a handout.
