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U.S. Sen. Sherrod Brown (D., Ohio) visited Toledo today to promote legislation he is sponsoring that would prevent lenders from launching foreclosure proceedings against homeowners in the midst of attempting to modify their mortgages.
The senator, who spoke at the Toledo offices of Advocates for Basic Legal Equality, Inc., also said that he is fearful that banks involved in a deal to pay $8.5 billion to homeowners hurt by the mortgage crisis are looking for ways to offset that settlement, primarily through tax deductions that would let them write off the full value of any settlement payouts.
He vowed to fight any attempt by banks to use tax deductions to offset the settlement, which he said essentially sticks American taxpayers with the bill while the banks who caused the mortgage crisis through greed, negligence, or indifference get off the hook.
“Taxpayers again would have to subsidize their malfeasance,” Mr. Brown said.
The senator added that there is no indication yet that banks will do that, but under current law companies can take advantage of tax rules to deduct the full value of settlements. He noted that BP already had written off $10 billion of its clean-up costs for their 2010 oil spill in the Gulf.
Mr. Brown said he has written a letter to Federal Reserve Chairman Ben Bernanke and Comptroller of the Currency Tom Curry urging them to prevent financial companies from using tax deductions as part of their legal settlements.