The financial institutions
would get significant tax breaks for their investments, thanks to the 2017
Republican tax law.
Monday, December 16, 2019
Rule changes proposed by
the Trump administration last week could let banks classify investments in
professional sports stadiums as aid to the poor, and then give the financial
institutions a significant tax break for their efforts.
The changes are part of an
Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance
Corporation (FDIC) plan to
overhaul the Community Reinvestment Act of 1977, which requires banks to invest
in low-income communities.
Both bank regulators are run
by appointees of President Donald Trump.
As Bloomberg reported Monday,
"the agencies drafted a long list hypothetical ways banks could seek to
meet their obligations [under the Community Reinvestment Act], including this
sentence on page 100 of their proposal: 'Investment in a qualified opportunity
fund, established to finance improvements to an athletic stadium in an
opportunity zone that is also [a low- or moderate-income] census tract.'"
"There are well over a
dozen NFL venues nestled in so-called opportunity zones," Bloomberg noted.
"They include M&T Bank Stadium in Baltimore, home of the National
Football League's Ravens, which this year completed $120 million in upgrades
such as a new sound system... There also are facilities for professional
baseball, basketball, soccer, and hockey teams in the zones."
Under the 2017 tax law signed
by President Donald Trump, real estate developers and financial institutions
that invest in "opportunity zones" receive a capital gains tax cut.
The tax incentive sparked
criticism from lawmakers including Sen. Ron Wyden (D-Ore.), who warned
in a statement last
month that "there are no safeguards to ensure taxpayers are not simply
subsidizing handouts for billionaires with no benefit to the low-income
communities this program was supposed to help."
"Republicans who support the
program should work with Democrats to ensure it does not become a
boondoggle," Wyden said.
Critics reacted with
incredulity to the Trump administration's proposed rule changes.
"The proposed credit for
financing 'improvements' to stadiums soon raised eyebrows among policy
wonks," Bloomberg reported. "That may put pressure on
regulators to clarify whether banks really can satisfy CRA obligations by, say,
funding a 200-foot video screen."
Daily Beast reporter
Lachlan Markey said the
proposal is "simply astonishing."
Pat Garofalo, managing editor
of Talk Poverty and author of the "Boondoggle"
newsletter, tweeted that
the proposed rule changes are "truly wild."
"A potential change to
the Community Reinvestment Act—the federal anti-redlining law—would allow banks
to meet their obligations by investing in sports stadiums in Opportunity
Zones," said Garofalo. "Opportunity Zones are a bad giveaway to
investors gentrifying neighborhoods. Stadium subsidies are a huge waste of
money."
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