The Journal is good to front a story on tax goodies for corporations, noting that JPMorgan Chase is about to get a tax break worth up to $1.4 billion even though TARP recipients aren’t supposed to be eligible.

This is great:

Some critics have found the corporate-tax-refund technique wanting as a stimulus or job-creation move. Prior to Congress’s passage of the $787 billion stimulus law in early 2009, the Congressional Budget Office looked at six possible stimulus approaches and ranked this one least effective, saying each corporate tax dollar refunded would generate at most 40 cents of boost to gross domestic product. The corporate-tax-refund approach wasn’t included in the big stimulus bill early in the year, but was part of legislation in November that extended jobless benefits.

And why is JPMorgan even eligible for the refund:

When Congress passed the tax break last fall, J.P. Morgan said it should be allowed to claim the $2.6 billion in tax refunds WaMu would have qualified for if it hadn’t failed and been seized by the FDIC…

J.P. Morgan officials have told other parties in the case the ban on TARP recipients using the tax break is irrelevant, because it was WaMu that paid the taxes on which the refund is based.

So? WaMu went bust. That $1.4 billion might be better kept in taxpayers’ tapped-out pockets than JPM’s stuffed ones, no?

The story’s fine print muddies the water a bit:

J.P. Morgan has noted the refund wouldn’t go to it directly; it would sit in a receivership at the FDIC that also houses the $1.9 billion JPM paid for WaMu’s banking assets and deposits.

Under the deal being discussed, $1.55 billion of the refund would go into the pot that would be used by the FDIC to cover J.P. Morgan’s potential losses on legal claims related to the takeover. J.P. Morgan can then make a claim for as much as $1.4 billion of those funds.

Make a claim? That’s not clear enough. But that’s a quibble. It’s good to keep an eye on these things.

— Edward Harrison of Credit Writedowns translates a Handelsblatt interview with Bryan Marsal, the CEO winding down Lehman Brothers, and finds some interesting stuff:

Handelsblatt: you are handling the largest bankruptcy in human history. Can anything like this happen again?

Bryan Marsal: It is even likely that a case like Lehman’s will repeat itself – in any event, as long as nothing fundamental changes in financial regulation and in financial institutions. Wall Street has not really learned a lot from the situation. There is still too much leverage in the market, and credit default swaps remain completely unregulated. Even with regulators and in the companies little has been done after the global catastrophe.

HB: But financial regulators around the world are now pulling in the reins …

Marsal: Oh, really? That’s just for show. The regulators are overworked and underpaid. Someone who earns $80,000 a year cannot seriously compete with someone who gets $400,000 for finding ways to get around the system. And so far no one from the regulators at the SEC, at the FDIC or our government has asked how the Lehman collapse could have been avoided and what countermeasures could be taken to prevent a recurrence.

— You could say this is like taking your eye off the ball by putting eyes on the ball:

The Journal’s New York sports section will assign beat reporters to the major local sports teams, including the Mets, Yankees, Jets, Giants and the Knicks, sources said. They’ll be credentialed for home games, and they’ll travel to road games.

Sure would be nice to beef up business coverage in such times as these.


Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.