Another example of the Democrats not understanding the economy…

http://apnews.myway.com/article/20090116/D95OEC801.html

http://money.cnn.com/2009/01/16/news/economy/taxprovs_HouseDem/index.htm?cnn=yes

The Democrats are proposing to repeal a recent tax cut to banks that was placed by the Bush administration in the last stimulus package.  The tax cut was intended to allow banks to write off losses from bad loans quickly, giving them an incentive to buy up the toxic loans that are now so prevalent.  The Democratic Congress, in their usual stupidity, wants to revoke the tax cut.

Why is this such a mistake?  Because the viability of many of the recent bank takeovers (Wells Fargo taking over Wachovia, PNC taking over National City) was completely dependent on these tax breaks.  For example, PNC saved $5.1 billion.  Without this tax break, they likely would have allowed National City to fold…and thus become a federal obligation.

Obama hopefully will threaten a veto because of this part of the bill, or convince the Democrats to remove to be more precise.  The ignorance of the Democrats on this issue is staggering, and scary.