The Fiscal, Uh, Valley: The budget deal reached at the beginning of this year extends an obscure but important tax break for U.S. banks that do business overseas, according to the FT. Under the "subpart F exception for active financing income" (rolls off the tongue, don't it?), income earned on certain transactions outside U.S. borders is taxed only when brought back into the country. The exception was introduced in the late 1990s as a "temporary" measure, but it's been extended every few years since. The latest extension is forecast to cost the Treasury some $9 billion this year. Megabank lobbyists argued, as lobbyists often do, that continuing the relief was necessary for U.S. companies to remain competitive with foreign firms taxed at lower rates. We suspect this news may rub salt in the wounds of some community bankers, in light of Congress' failure to similarly renew the also-originally-temporary TAG program, which expired at yearend. The big banks are in good company, though: "Hollywood, the railroad industry and rum producers" also retained tax breaks as part of the budget deal according to the Times. And the drama isn't even over yet: "Fresh Budget Fights Brewing," says the Journal); "Lawmakers Gird for Next Fiscal Clash, on the Debt Ceiling," per the Times. The Journal's "Heard on the Street" column warns investors that Wednesday's relief rally may be premature. The same point, more or less, is made in the Post: "Business leaders say the agreement won't ease economic uncertainty and warn that the market gains could evaporate once lawmakers move on to the next battle over raising the federal borrowing limit." On the Journal editorial page, economist Martin Feldstein faults the Fed's bond-buying program for (among other things) keeping long-term rates low and thus taking the pressure off Congress and the president to deal with deficits.

B of A: The FT has a pair of stories this morning about Bank of America. One takes stock of CEO Brian Moynihan's progress in shoring up the institution three years into the job. (Wonder where they got the idea for such a piece?) The other article says that after two years of retrenchment B of A is ramping up corporate and mortgage lending, and aims to overtake JPMorgan in the direct mortgage business within six months.

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