Re Five-year Carryback of Net Operating Losses by bud19087

VIEWS: 12 PAGES: 28

									                                                                                                Norman R. Nelson
                                                                                                 Generol Counsel
                                                                                              450 west 33rd Street
                                                                                              New York, NY 10001
                                                                                                 tele 212.612.9205




     THECLEARINGHOUSE,
     Advancing Payment Solutions Worldwide



                                                                    June 2,2009



Senator Olympia J. Snowe
United States Senate
154 Russell Senate Office Building
Washington, D.C. 20510

               Re:      Five-year Carryback of Net Operating Losses

Dear Senator Snowe:

               The Clearing House Association L.L.C., an association of major banks,' urges
you to support the enactment of a provision that would lengthen the net operating loss ("NOL")
carryback period fiom two years to five years for all corporations, including all financial
institutions.

               The American Recovery and Reinvestment Act of 2009 (the "Stimulus Act")
lengthened the NOL canyback period (for losses recognized in 2008) from two to five years, but
only for corporations with less than $15 million in gross receipts. As you know, proposals to
apply that extended carryback to a much broader group of corporations (and to losses recognized
in 2009 and 2010) are in the President's Fiscal 2010 Budget Proposal, S. 823 (introduced by you
and Senator Baucus on April 2,2009) and H.R. 2452 (introduced by Representative Neal on
May 15,2009). The Clearing House strongly supports the enactment of an extended carryback
that would apply to all corporations, without any exclusions.

                Lengthening the carryback period for NOLs will promote economic recovery and
is appropriate tax policy in the current economic environment. It will help buffer the impact of
significant losses and enable corporations to minimize drastic actions such as lay-offs and even
liquidations. For the U.S. Government, the cost should be limited to the time value of providing
the refund to the taxpayer at this time, because the taxpayer would otherwise be able to carry the
NOLs folward and therefore have a lower tax bill in a future year.
1
       The members of The Clearing House are ABN AMRO Bank N.V.; Bank of America, National Association;
       The Bank of New York Mellon; Citibank, N.A.; Deutsche Bank Trust Company Americas; HSBC Bank
       USA, National Association; JPMorgan Chase Bank, National Association; UBS AG; U.S. Bank National
       Association; and Wells Fargo Bank, National Association.



                                    The Cleoting House Associotlon L.L.C,
Senator Olympia J. Snowe                             -2-                                           June 2,2009


               In the case of the banking industry, a longer NOL carryback period could be of
particular benefit in enabling the industry to fulfill its role in the economy by providing loans to
creditworthy borrowers. It would also greatly facilitate the Government's program of
encouraging banks to dispose of their legacy assets without creating losses that are unsustainable.

               The expanded carryback period would increase banks' resources, as it would for
all corporations with significant losses, at this critical time in our economy. Moreover, in the
case of banks, it would enhance their regulatory capital position, which is the fulcrum on which
additional lending can be based. The reason for this is as follows.

                 In determining a bank's Tier 1 capital for Federal bank regulatory purposes, the
potential tax benefit of NOLs is reflected as an asset (i.e., the potential tax reduction or refund is
recorded as a "defe~xed asset" or "DTA"). If the NOL can be carried back, the related DTA
                          tax
is then fully reflected in Tier 1 capital. In contrast, an NOL that is to be carried forward will be
reflected in Tier 1 capital only to the extent the NOL is expected to be realized within the next 12
months (and does not exceed 10% of Tier 1 capital). Thus, an expanded NOL carryback period
increases the amount of DTAs that can be reflected in Tier 1 capitaL2 Because many banks
(including some of the country's largest banks) have significant NOLs, the magnitude of which
may continue to grow in the near future, this action will significantly improve banks' capital
positions at the present time when it is most needed, as opposed to at a point in the future.

                The Stimulus Act included the extension of the NOL carryback because it was
expected to have a positive effect on the country's economy. That positive effect would be
significantly greater if the provision were made applicable to all taxpayers, including all financial
institutions. We believe that providing the extended carryback to all financial institutions,
regardless of size, including those that received TARP assistance, will hasten the recovery of our
economy.


               The Clearing House appreciates your consideration of these comments. If you
have any questions or if the members of The Clearing House can assist you in any way, please
contact me at (212) 612-9205.

                                                                       Very truly yours,




2
       The 10% limit applies only to a bank's net DTAs remaining after considering c a w hack capacity. So,
       canying back a greater portion of a bank's NOLs leaves more room for other DTAs and any remaining
       (carryforward) NOLs to be reflected in Tier I capital under the 10% limitation. Other types of DTAs
       include the future tax benefits associated with loan loss reserves, another item that is growing for banks.
                                                                                               Norman R. Nelson
                                                                                                General Counsel

                                                                                             450 west 33rd Street
                                                                                             New York, N I0001
                                                                                                          Y
                                                                                                tele 212.612.9205




     THE CLEARINGHOUSE,
     Advancing Payment Solutions Worldwide




                                                                   June 2,2009


The Honorable Richard Durbin
United States Senate
309 Hart Senate Office Building
Washington, DC 20510

               Re:      Five-year Carrvback of Net Operating.Losses

Dear Senator Durbin:

               The Clearing House Association L.L.C., an association of major banks,' urges
you to support the enactment of a provision that would lengthen the net operating loss ("NOL")
carryback period from two years to five years for all corporations, including all financial
institutions.

               The American Recovery and Reinvestment Act of 2009 (the "Stimulus Act")
lengthened the NOL ca~iyback     period (for losses recognized in 2008) from two to five years, but
only for corporations with less than $15 million in gross receipts. As you know, proposals to
apply that extended carryback to a much broader group of corporations (and to losses recognized
in 2009 and 2010) are in the President's Fiscal 2010 Budget Proposal, S. 823 (introduced by
Senators Snowe and Baucus on April 2,2009) and H.R. 2452 (introduced by Representative
Neal on May 15,2009). The Clearing House strongly supports the enactment of an extended
carryback that would apply to all corporations, without any exclusions.

                Lengthening the carryback period for NOLs will promote economic recovery and
is appropriate tax policy in the current economic environment. It will help buffer the impact of
significant losses and enable corporations to minimize drastic actions such as lay-offs and even
liquidations. For the U.S. Government, the cost should be limited to the time value of providing
the refund to the taxpayer at this time, because the taxpayer would otherwise be able to carry the
NOLs forward and therefore have a lower tax bill in a future year.

1
       The members of The Clearing House are ABN AMRO Bank N.V.; Bank of America, National Association;
       The Bank of New York Mellon; Citibank, N.A.; Deutsche Bank Trust Company Americas; HSBC Bank
       USA, National Association; JPMorgan Chase Bank, National Association; UBS AG; U.S. Bank National
       Association; and Wells Fargo Bank, National Association.



                                    The Clearing House Association L.L.C
The Honorable Richard Durbin                        -2-                                           June 2,2009



               In the case of the banking industry, a longer NOL ca~yback       period could be of
particular benefit in enabling the industry to fulfill its role in the economy by providing loans to
creditworthy borrowers. It would also greatly facilitate the Government's program of
encouraging banks to dispose of their legacy assets without creating losses that are unsustainable.

               The expanded carsyback period would increase banks' resources, as it would for
all corporations with significant losses, at this critical time in our economy. Moreover, in the
case of banks, it would enhance their regulatory capital position, which is the fulcrum on which
additional lending can be based. The reason for this is as follows.

                 In determining a bank's Tier 1 capital for Federal bank regulatory purposes, the
potential tax benefit of NOLs is reflected as an asset (ie.,the potential tax reduction or refund is
recorded as a "deferred tax asset" or "DTA"). If the NOL can be carried back, the related DTA
is then fully reflected in Tier 1 capital. In contrast, an NOL that is to be carsied forward will be
reflected in Tier 1 capital only to the extent the NOL is expected to be realized within the next 12
months (and does not exceed 10% of Tier 1 capital). Thus, an expanded NOL carryback period
increases the amount of DTAs that can be reflected in Tier 1 capital.' Because many banks
(including some of the country's largest banks) have significant NOLs, the magnitude of which
may continue to grow in the near future, this action will significantly improve banks' capital
positions at the present time when it is most needed, as opposed to at a point in the future.

                The Stimulus Act included the extension of the NOL carryback because it was
expected to have a positive effect on the country's economy. That positive effect would be
significantly greater if the provision were made applicable to all taxpayers, including all financial
institutions. We believe that providing the extended carryback to all financial institutions,
regardless of size, including those that received TARP assistance, will hasten the recovery of our
economy.


               The Clearing House appreciates your consideration of these comments. If you
have any questions or if the members of The Clearing House can assist you in any way, please
contact me at (212) 612-9205.

                                                                      Very truly yours,




2
       The 10% limit applies only to a bank's net DTAs remaining after considering carly back capacity. So,
       carrying back a greater portion of a bank's NOLs leaves more room for other DTAs and any remaining
       (cmyforward) NOLs to be reflected in Tier I capital under the 10% limitation. Other types of DTAs
       include the hture tax benefits associated with loan loss reserves, another item that is growing for banks
                                                                                                Norman R. Nelson     I
                                                                                                Generol Counsel      I

                                                                                              450 West 33rd Street
                                                                                              New York, NY 1000 1
                                                                                                tele 212.61 2.9205




     THE CLEARING HOUSE,
     Advancing Payment Solutions Worldwide




                                                                    June 2,2009

The Honorable Nancy Pelosi
Speaker
United States House of Representatives
235 Cannon House Office Building
Washington, DC 205 15

               Re:      Five-year Carryback of Net Ooeratina Losses

Dear Madam Speaker:

               The Clearing House Association L.L.C., an association of major banks,' urges
you to support the enactment of a provision that would lengthen the net operating loss ("NOL")
carryback period from two years to five years for all corporations, including all financial
institutions.

                The American Recovery and Reinvestment Act of 2009 (the "Stimulus Act")
lengthened the NOL carryback period (for losses recognized in 2008) from two to five years, but
only for corporations with less than $15 million in gross receipts. As you know, proposals to
apply that extended carryback to a much broader group of corporations (and to losses recognized
in 2009 and 2010) are in the President's Fiscal 2010 Budget Proposal, S. 823 (introduced by
Senators Snowe and Baucus on April 2,2009) and H.R. 2452 (introduced by Representative
Neal on May 15,2009). The Clearing House strongly suppoits the enactment of an extended
           that
ca~ryback would apply to all coiporations, without any exclusions.

                Lengthening the ca~ryback   period for NOLs will promote economic recovery and
is appropriate tax policy in the current economic environment. It will help buffer the impact of
significant losses and enable corporations to minimize drastic actions such as lay-offs and even
liquidations. For the U.S. Government, the cost should be limited to the time value of providing
the refund to the taxpayer at this time, because the taxpayer would otherwise be able to carry the
NOLs forward and therefore have a lower tax bill in a future year.
I
       The members of The Clearing House are ABN AMRO Bank N.V.; Bank of America, National Association;
       The Bank of New York Mellon; Citibank, N.A.; Deutsche Bank Trust Company Americas; HSBC Bank
       USA, National Association; JPMorgan Chase Bank, National Association; UBS AG; U.S. Bank National
       Association; and Wells Fargo Bank, National Association.



                                    The Clearing House Association L.L.C
The Honorable Nancy Pelosi                           -2-                                           June 2,2009



               In the case of the banking industry, a longer NOL carryback period could be of
particular benefit in enabling the industry to fulfill its role in the economy by providing loans to
creditworthy borrowers. It would also greatly facilitate the Government's program of
encouraging banks to dispose of their legacy assets without creating losses that are unsustainable.

               The expanded carryback period would increase banks' resources, as it would for
all corporations with significant losses, at this critical time in our economy. Moreover, in the
case of banks, it would enhance their regulatory capital position, which is the fulcrum on which
additional lending can be based. The reason for this is as follows.

                 In determining a bank's Tier 1 capital for Federal bank regulatory purposes, the
potential tax benefit of NOLs is reflected as an asset (i.e., the potential tax reduction or refund is
recorded as a "deferred tax asset" or "DTA"). If the NOL can be carried back, the related DTA
is then fully reflected in Tier 1 capital. In contrast, an NOL that is to be carried forward will be
reflected in Tier 1 capital only to the extent the NOL is expected to be realized within the next 12
months (and does not exceed 10% of Tier 1 capital). Thus, an expanded NOL carryback period
increases the amount of DTAs that can be reflected in Tier 1 capital2 Because many banks
(including some of the country's largest banks) have significant NOLs, the magnitude of which
may continue to grow in the near future, this action will significantly improve banks' capital
positions at the present time when it is most needed, as opposed to at a point in the future.

                The Stimulus Act included the extension of the NOL carryback because it was
expected to have a vositive effect on the countrv's economv. That nositive effect would be
                     L


significantly greater if the provision were made applicable to all taxpayers, including all financial
institutions. We believe that providing the extended cal~yback all financial institutions,
                                                                 to
regardless of size, including those thatreceived TARP assistance, will hasten the recovery of our
economy.



               The Clearing House appreciates your consideration of these comments. If you
have any questions or if the members of The Clearing House can assist you in any way, please
contact me at (212) 612-9205.

                                                                       Very truly yours,




2
       The 10% limit applies only to a bank's net DTAs remaining after considering carry back capacity. So,
       carrying back a greater portion of a bank's NOLs leaves more room for other DTAs and any remaining
       (carryforward) NOLs to be reflected in Tier I capital under the 10% limitation. Other types of DTAs
       include the futnre tax benefits associated with loan loss reserves, another item that is growing for banks
                                                                                               Norman R. Nelson
                                                                                               General Counsel
                                                                                             450 West33rd Street
                                                                                             New York, NY 10001
                                                                                                tele 212.612.9205




     THECLEARINGHOUSE,
     Advancing Payment Solutions Worldwide




                                                                    June 2.2009

Mr. Thomas A. Barthold
Joint Committee on Taxation
1015 I>ongworthHouse Office Building
Washington, D.C. 20515

               Re:      Five-year Car~yback Net Operating Losses
                                          of

Dear Mr. Barthold:

                The Clearing House Association L.L.C., an association of major banks,' urges
you to support the enactment of a provision that would lengthen the net operating loss ('TOY)
car-ryback period from two years to five years for all corporations, including all financial
institutions.

               The American Recovery and Reinvestment Act of 2009 (the "Stimulus Act")
lengthened the NOL car~yback    period (for losses recognized in 2008) fsom two to five years, but
only for corporations with less than $15 million in gross receipts. As you know, proposals to
apply that extended carryback to a much broader group of corporations (and to losses recognized
in 2009 and 2010) are in the President's Fiscal 2010 Budget Proposal, S. 823 (introduced by
Senators Snowe and Baucus on April 2,2009) and H.R. 2452 (introduced by Representative
Neal on May 15,2009). The Clearing House strongly supports the enactment of an extended
canyback that would apply to all corporations, without any exclusions.

                Lengthening the carryback period for NOLs will promote economic recovery and
is appropriate tax policy in the current economic environment. It will help buffer the impact of
significant losses and enable corporations to minimize drastic actions such as lay-offs and even
liquidations. For the U.S. Government, the cost should be limited to the time value of providing
the refund to the taxpayer at this time, because the taxpayer would otherwise be able to carry the
NOLs forward and therefore have a lower tax bill in a future year.

1
       The members of The Clearing House are ABN AMRO Bank N.V.; Bank of America, National Association;
       The Bank ofNew York Mellon; Citibank, N.A.; Deutsche Bank Trust Company Americas; HSBC Bank
       USA, National Association; JPMorgan Chase Bank, National Association; UBS AG; U.S. Bank National
       Association; and Wells Fargo Bank, National Association.



                                     The Clearing House Association L.L.C
Mr. Thomas A. Barthold                                -2-                                           June 2,2009



               In the case of the banking industry, a longer NOL carryback period could be of
particular benefit in enabling the industry to fulfill its role in the economy by providing loans to
creditworthy borrowers. It would also greatly facilitate the Government's program of
encouraging banks to dispose of their legacy assets without creating losses that are unsustainable.

               The expanded carryback period would increase banks' resources, as it would for
all corporations with significant losses, at this critical time in our economy. Moreover, in the
case of banks, it would enhance their regulatory capital position, which is the fulcrum on which
additional lending can be based. The reason for this is as follows.

                 In determining a bank's Tier 1 capital for Federal bank regulatory purposes, the
potential tax benefit of NOLs is reflected as an asset (i.e.,the potential tax reduction or refund is
recorded as a "deferred tax asset" or "DTA"). If the NOL can be carried back, the related DTA
is then fully reflected in Tier 1 capital. In contrast, an NOL that is to be carsied forward will be
reflected in Tier 1 capital only to the extent the NOL is expected to be realized within the next 12
months (and does not exceed 10% of Tier 1 capital). Thus, an expanded NOL carryback period
increases the amount of DTAs that can be reflected in Tier 1 capitaL2 Because many banks
(including some of the country's largest banks) have significant NOLs, the magnitude of which
may continue to grow in the near future, this action will significantly improve banks' capital
positions at the present time when it is most needed, as opposed to at a point in the future.

                The Stimulus Act included the extension of the NOL carryback because it was
expected to have a positive effect on the countrv's economv. That aositive effect would be
    A                                                                            L


significantly greater if the provision were made applicable to all taxpayers, including all financial
institutions. We believe that providing the extended carryback to all financial institutions,
regardless of size, including those thatreceived TARP assistance, will hasten the recovery of our
economy.



               The Clearing House appreciates your consideration of these comments. If you
have any questions or if the members of The Clearing House can assist you in any way, please
contact me at (212) 612-9205.

                                                                        Very truly yours,




2
        The 10% limit applies only to a bank's net DTAs remaining after considering carry back capacity. So,
        carrying back a greater portion of a bank's NOLs leaves more room for other DTAs and any remaining
        (cayforward) NOLs to be reflected in Tier I capital under the 10% limitation. Other types of DTAs
        include the future tax benefits associated with loan loss reserves, another item that is growing for banks
                                                                                                Norman R. Nelson
                                                                                                 General Counsel

                                                                                              450 West 33rd Street
                                                                                              New York, N 10001
                                                                                                           Y
                                                                                                 tele 212.612.9205




     THE CLEARINGHOUSE,
     Advancing Payment Solutions Worldwide




                                                                     June 2,2009


The Honorable Timothy F. Geithner
Secretary of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220

               Re:      Five-year Carryback of Net Operating Losses

Dear Mr. Secretary:

               The Clearing House Association L.L.C., an association of major banks,' urges
you to support the enactment of a provision that would lengthen the net operating loss ('NOL")
carryback period fiom two years to five years for all corporations, including all financial
institutions.

               The American Recovery and Reinvestment Act of 2009 (the "Stimulus Act")
lengthened the NOL ca~iyback     period (for losses recognized in 2008) from two to five years, but
only for corporations with less than $15 million in gross receipts. As you know, proposals to
apply that extended carryback to a much broader group of corporations (and to losses recognized
in 2009 and 2010) are in the President's Fiscal 2010 Budget Proposal, S. 823 (introduced by
Senators Snowe and Baucus on April 2,2009) and H.R. 2452 (introduced by Representative
Neal on May 15,2009). The Clearing House strongly supports the enactment of an extended
canyback that would apply to all corporations, without any exclusions.

                Lengthening the carryback period for NOLs will promote economic recovery and
is appropriate tax policy in the current economic environment. It will help buffer the impact of
significant losses and enable corporations to minimize drastic actions such as lay-offs and even
liquidations. For the U.S. Government, the cost should be limited to the time value of providing
the refund to the taxpayer at this time, because the taxpayer would otherwise be able to carry the
NOLs forward and therefore have a lower tax bill in a future year.

1
       The members of The Clearing House are ABN AMRO Bank N.V.; Bank o f America, National Association;
       The Bank of New York Mellon; Citibank, N.A.; Deutsche Bank Trust Company Americas; HSBC Bank
       USA, National Association; JPMorgan Chase Bank, National Association; UBS AG; U.S. Bank National
       Association; and Wells Fargo Bank, National Association.



                                     The Cleoring House Association L.L.C.
The Honorable Timothy F. Geithner                  -2-                                       June 2,2009



               In the case of the banking industry, a longer NOL carryback period could be of
particular benefit in enabling the industry to fulfill its role in the economy by providing loans to
creditworthy borrowers. It would also greatly facilitate the Government's program of
encouraging banks to dispose of their legacy assets without creating losses that are unsustainable.

               The expanded carryback period would increase banks' resources, as it would for
all corporations with significant losses, at this critical time in our economy. Moreover, in the
case of banks, it would enhance their regulatory capital position, which is the fulcrum on which
additional lending can be based. The reason for this is as follows.

                 In determining a bank's Tier 1 capital for Federal bank regulatory purposes, the
potential tax benefit of NOLs is reflected as an asset (ie.,the potential tax reduction or refund is
recorded as a "deferred tax asset" or "DTA"). If the NOL can be carried back, the related DTA
is then fully reflected in Tier 1 capital. In contrast, an NOL that is to be carried forward will be
reflected in Tier 1 capital only to the extent the NOL is expected to be realized within the next 12
months (and does not exceed 10% of Tier 1 capital). Thus, an expanded NOL carryback period
increases the amount of DTAs that can be reflected in Tier 1 capital.' Because many banks
(including some of the countly's largest banks) have significant NOLs, the magnitude of which
may continue to grow in the near future, this action will significantly improve banks' capital
positions at the present time when it is most needed, as opposed to at a point in the future.

                The Stimulus Act included the extension of the NOL carryback because it was
expected to have a positive effect on the country's economy. That positive effect would be
significantly greater if the provision were made applicable to all taxpayers, including all financial
institutions. We believe that providing the extended carryback to all financial institutions,
regardless of size, including those that received TAW assistance, will hasten the recovery of our
economy.


               The Clearing House appreciates your consideration of these comments. If you
have any questions or if the members of The Clearing House can assist you in any way, please
contact me at (212) 612-9205.

                                                                       Very tluly yours,




2
       The 10% limit applies only to a bank's net DTAs remaining after considering carly back capacity. So,
       canying back a greater portion of a bank's NOLs leaves more room for other DTAs and any remaining
       (car~yforward)  NOLs to be reflected in Tier I capital under the 10% limitation. Other types of DTAs
       include the future tax benefits associated with loan loss reserves, another item that is growing for banks.
                                                                                                Norman R. Nelson     I
                                                                                                 General Counsel     I
                                                                                                                     I
                                                                                              450 West 33rd Street   I
                                                                                              NewYork, NY 1MN)l      1
                                                                                                 tele 212.612.9205




     THE CLEARINGHOUSE,
     Advancing Payment Solutions Worldwide



                                                                    June 2,2009

The Honorable Charles Range1
Chairman
Committee on Ways & Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington D.C. 205 15

               Re:      Five-year Carryback of Net Operating Losses

Dear Chairman Rangel:

               The Clearing House Association L.L.C., an association of major banks,' urges
you to support the enactment of a provision that would lengthen the net operating loss ("NOL")
cawyback period from two years to five years for all corporations, including all financial
institutions.

               The American Recovery and Reinvestment Act of 2009 (the "Stimulus Act")
lengthened the NOL caiiyback period (for losses recognized in 2008) from two to five years, but
only for corporations with less than $15 million in gross receipts. As you know, proposals to
apply that extended carryback to a much broader group of corporations (and to losses recognized
in 2009 and 2010) are in the President's Fiscal 2010 Budget Proposal, S. 823 (introduced by
Senators Snowe and Baucus on April 2,2009) and H.R. 2452 (introduced by Representative
Neal on May 15,2009). The Clearing House strongly supports the enactment of an extended
carryback that would apply to all corporations, without any exclusions.

                Lengthening the carryback period for NOLs will promote economic recovery and
is appropriate tax policy in the current economic environment. It will help buffer the impact of
significant losses and enable corporations to minimize drastic actions such as lay-offs and even
liquidations. For the U.S. Government, the cost should be limited to the time value of providing
the refund to the taxpayer at this time, because the taxpayer would otherwise be able to carry the
NOLs forward and therefore have a lower tax bill in a future year.
I
       The members of The Clearing House are ABN AMRO Bank N.V.; Bank of America, National Association;
       The Bank of New York Mellon; Citibank, N.A.; Deutsche Bank Tlust Company Americas; HSBC Bank
       USA, National Association; JPMorgan Chase Bank, National Association; UBS AG; U.S. Bank National
       Association; and Wells Fargo Bank, National Association.



                                    The Clearing House Association L.L.C.
The Honorable Charles Range1                       -2-                                       June 2,2009



              In the case of the banking industry, a longer NOL carryback period could be of
particul& benefit in enabling the industsy to fulfill its role in the economy by providing loans to
creditworthy borrowers. It would also greatly facilitate the Government's program of
encouraging banks to dispose of their legacy assets without creating losses that are unsustainable.

               The expanded canyback period would increase banks' resources, as it would for
all corporations with significant losses, at this critical time in our economy. Moreover, in the
case of banks, it would enhance their regulatory capital position, which is the fulcrum on which
additional lending can be based. The reason for this is as follows.

                 In determining a bank's Tier 1 capital for Federal bank regulatory purposes, the
potential tax benefit of NOLs is reflected as an asset (i.e., the potential tax reduction or refund is
recorded as a "deferred tax asset" or "DTA"). If the NOL can be canied back, the related DTA
is then fully reflected in Tier 1 capital. In contrast, an NOL that is to be carried forward will be
reflected in Tier 1 capital only to the extent the NOL is expected to be realized within the next 12
months (and does not exceed 10% of Tier 1 capital). Thus, an expanded NOL carryback period
increases the amount of DTAs that can be reflected in Tier 1 caPitaL2 Because many banks
(including some of the country's largest banks) have significant NOLs, the magnitude of which
may continue to grow in the near future, this action will significantly improve banks' capital
positions at the present time when it is most needed, as opposed to at a point in the future.

                The Stimulus Act included the extension of the NOL carryback because it was
expected to have a positive effect on the country's economy. That positive effect would be
significantly greater if the provision were made applicable to all taxpayers, including all financial
institutions. We believe that providing the extended carryback to all financial institutions,
regardless of size, including those that received TARP assistance, will hasten the recovery of our
economy.



               The Clearing House appreciates your consideration of these comments. If you
have any questions or if the members of The Clearing House can assist you in any way, please
contact me at (212) 612-9205.

                                                              Very tluly yours,




2
       The 10% limit applies only to a bank's net DTAs remaining after considering cany back capacity. So,
       c a v i n g back a greater poltion of a bank's NOLs leaves more room for other DTAs and any remaining
       (canyforward) NOLs to be reflected in Tier I capital under the 10% limitation. Other types of DTAs
       include the future tax benefits associated with loan loss reserves, another item that is growing for banks.
                                                                                                Norman R. Nelson
                                                                                                 Generol Counsel
                                                                                                                     I

                                                                                              450 west 33rd Street   I
                                                                                              New York, NY 10001
                                                                                                 tele 212612.9205
                                                                                                                     I




     THE CLEARINGHOUSE,
     Advancing Payment Solutions Worldwide



                                                                       June 2,2009
The Honorable Max Baucus
Chairman
Committee on Finance
United States Senate
219 Dirksen Senate Office Building
Washington, D.C. 20510-6200

               Re:      Five-year Carrvback of Net Operating Losses

Dear Chairman Baucus:

               The Clearing House Association L.L.C., an association of major banks,' urges
you to support the enactment of a provision that would lengthen the net operating loss ("NOL")
carryback period fiom two years to five years for all corporations, including all financial
institutions.

               The American Recovery and Reinvestment Act of 2009 (the "Stimulus Act")
lengthened the NOL carryback period (for losses recognized in 2008) from two to five years, but
only for corporations with less than $15 million in gross receipts. As you know, proposals to
apply that extended carryback to a much broader group of corporations (and to losses recognized
in 2009 and 2010) are in the President's Fiscal 2010 Budget Proposal, S. 823 (introduced by you
and Senator Sno~ve April 2,2009) and H.R. 2452 (introduced by Representative Neal on
                    on
May 15,2009). The Clearing House strongly suppolts the enactment of an extended carryback
that would apply to all corporations, without any exclusions.

                Lengthening the carryback period for NOLs will promote economic recovery and
is appropriate tax policy in the current economic environment. It will help buffer the impact of
significant losses and enable corporations to minimize drastic actions such as lay-offs and even
liquidations. For the U.S. Government, the cost should be limited to the time value of providing
the refund to the taxpayer at this time, because the taxpayer would otherwise be able to carry the
NOLs forward and therefore have a lower tax bill in a future year.

1
       The members of The Clearing House are ABN AMRO Bank N.V.; Bank of America, National Association;
       The Bank ofNew York Mellon; Citibank, N.A.; Deutsche Bank Trnst Company Americas; HSBC Bank
       USA, National Association; JPMorgan Chase Bank, National Association; UBS AG; U.S. BankNational
       Association; and Wells Fargo Bank, National Association.



                                    The Cleating House Association L.L.C,
The Honorable Max Baucus                             -2-                                  June 2,2009



               In the case of the banking industry, a longer NOL carryback period could be of
particular benefit in enabling the industry to fulfill its role in the economy by providing loans to
creditworthy borrowers. It would also greatly facilitate the Government's program of
encouraging banks to dispose of their legacy assets without creating losses that are unsustainable.

               The expanded cassyback period would increase banks' resources, as it would for
all corporations with significant losses, at this critical time in our economy. Moreover, in the
case of banks, it would enhance their regulatory capital position, which is the fulcrum on which
additional lending can be based. The reason for this is as follows.

                 In determining a bank's Tier 1 capital for Federal bank regulatory purposes, the
potential tax benefit of NOLs is reflected as an asset (ie.,the potential tax reduction or refund is
recorded as a "deferred tax asset" or "DTA"). If the NOL can be carried back, the related DTA
is then fully reflected in Tier 1 capital. In contrast, anNOL that is to be cassied forward will be
reflected in Tier 1 capital only to the extent the NOL is expected to be realized within the next 12
months (and does not exceed 10% of Tier 1 capital). Thus, an expanded NOL carryback period
increases the amount of DTAs that can be reflected in Tier 1 capitaL2 Because many banks
(including some of the country's largest banks) have significant NOLs, the magnitude of which
may continue to grow in the near future, this action will significantly improve banks' capital
positions at the present time when it is most needed, as opposed to at a point in the future.

                The Stimulus Act included the extension of the NOL carryback because it was
expected to have a positive effect on the country's economy. That positive effect would be
significantly greater if the provision were made applicable to all taxpayers, including all financial
institutions. We believe that providing the extended carryback to all financial institutions,
regardless of size, including those that received TARP assistance, will hasten the recovery of our
economy.


               The Clearing House appreciates your consideration of these comments. If you
have any questions or if the members of The Clearing House can assist you in any way, please
contact me at (212) 612-9205.

                                                                       Very truly yours,




2
       The 10% limit applies only to a hank's net DTAs remaining after considering carry back capacity. So,
       carving back a greater portion of a bank's NOLs leaves more room for other DTAs and any remaining
       (canyfol~vard)  NOLs to be reflected in Tier I capital under the 10% limitation. Other types of DTAs
       include the future tax benefits associated with loan loss reserves, another item that is growing for banks.
                                                                                               Norman R. Nelson
                                                                                                General Counsel

                                                                                             450 West 33rd Street   1
                                                                                             New York, NY iOW1
                                                                                                tele 212.612.9205




     THE CLEARING HOUSE,
     Advancing Payment Solutions Worldwide



                                                                   June 2,2009


The Honorable Charles Grassley
Ranking Member
Committee on Finance
219 Dirksen Senate Office Building
Washington, D.C. 20510-6200

               Re:      Five-year Carryback of Net Operating Losses

Dear Senator Grassley:

               The Clearing House Association L.L.C., an association of major banks,' urges
you to support the enactment of a provision that would lengthen the net operating loss ("NOL")
carryback period from two yeass to five years for all corporations, including all financial
institutions.

               The American Recovery and Reinvestment Act of 2009 (the "Stimulus Act")
lengthened the NOL ca~iyback     period (for losses recognized in 2008) from two to five years, but
only for corporations with less than $15 million in gross receipts. As you know, proposals to
apply that extended casryback to a much broader group of corporations (and to losses recognized
in 2009 and 2010) are in the President's Fiscal 2010 Budget Proposal, S. 823 (introduced by
Senators Snowe and Baucus on April 2,2009) and H.R. 2452 (introduced by Representative
Neal on May 15,2009). The Clearing House strongly supports the enactment of an extended
carryback that would apply to all corporations, without any exclusions.

                Lengthening the carryback period for NOLs will promote economic recovery and
is appropriate tax policy in the current economic environment. It will help buffer the impact of
significant losses and enable corporations to minimize drastic actions such as lay-offs and even
liquidations. For the U.S. Government, the cost should be limited to the time value of providing
the refund to the taxpayer at this time, because the taxpayer would otherwise be able to carry the
NOLs forward and therefore have a lower tax bill in a future year.
1
       The members of The Clearing House are ABN AMRO Bank N.V.; Bank of America, National Association;
       The Bank of New York Mellon; Citibank, N.A.; Deutsche Bank Trust Company Americas; HSBC Bank
       USA, National Association; JPMorgan Chase Bank, National Association; UBS AG; U.S. Bank National
       Association; and Wells Fargo Bank, National Association.



                                    The Clearing House Association L.L.C
The Honorable Charles Grassley                        -2-                                           June 2,2009



               In the case of the banking industry, a longer NOL cassyback period could be of
particular benefit in enabling the industry to fulfill its role in the economy by providing loans to
creditworthy bossowers. It would also greatly facilitate the Government's program of
encouraging banks to dispose of their legacy assets without creating losses that are unsustainable.

               The expanded carryback period would increase banks' resources, as it would for
all corporations with significant losses, at this critical time in our economy. Moreover, in the
case of banks, it would enhance their regulatory capital position, which is the fulcrum on which
additional lending can be based. The reason for this is as follows.

                  In determining a bank's Tier 1 capital for Federal bank regulatory purposes, the
potential tax benefit of NOLs is reflected as an asset (i.e.,the potential tax reduction or refund is
recorded as a "deferred tax asset" or "DTA'). If the NOL can be carried back, the related DTA
is then fillly reflected in Tier 1 capital. In contrast, an NOL that is to be c a ~ i e d
                                                                                        forward will be
reflected in Tier 1 capital only to the extent the NOL is expected to be realized within the next 12
months (and does not exceed 10% of Tier 1 capital). Thus, an expanded NOL carryback period
increases the amount of DTAs that can be reflected in Tier 1 capitaL2 Because many banks
(including some of the country's largest banks) have significant NOLs, the magnitude of which
may continue to grow in the near future, this action will significantly improve banks' capital
positions at the present time when it is most needed, as opposed to at a point in the future.

                The Stimulus Act included the extension of the NOL carryback because it was
expected to have a positive effect on the country's economy. That positive effect would be
significantly greater if the provision were made applicable to all taxpayers, including all financial
institutions. We believe that providing the extended carryback to all financial institutions,
regardless of size, including those that received TARP assistance, will hasten the recovery of our
economy.


               The Clearing House appreciates your consideration of these comments. If you
have any questions or if the members of The Clearing House can assist you in any way, please
contact me at (212) 612-9205.

                                                                        Very truly yours,




2
        The 10% limit applies only to a bank's net DTAs remaining after considering carry back capacity. So,
        carrying back a greater portion of a bank's NOLs leaves more room for other DTAs and any remaining
        (canyfonvard) NOLs to be reflected in Tier I capital under the 10% limitation. Other types of DTAs
        include the future tax benefits associated with loan loss reserves, another item that is growing for banks
                                                                                               Norman R. Nelson
                                                                                                General Counsel
                                                                                             450 West 33rd Street
                                                                                             New York, NY 10001
                                                                                                tele 212.612.9205




     THE CLEARING
                HOUSE,
     Advancing Payment Solutions Worldwide



                                                                   June 2,2009


The Honorable Harry Reid
Majority Leader
United States Senate
522 Hart Senate Office Building
Washington, DC 20510

               Re:      Five-year Carryback of Net Operating Losses

Dear Senator Reid:

               The Clearing House Association L.L.C., an association of major banks,' urges
you to support the enactment of a provision that would lengthen the net operating loss ("NOL")
carryback period from two years to five years for all corporations, including all financial
institutions.

               The American Recovery and Reinvestment Act of 2009 (the "Stimulus Act")
lengthened the NOL carryback period (for losses recognized in 2008) from two to five years, but
only for coiporations with less than $15 million in gross receipts. As you know, proposals to
apply that extended carryback to a much broader group of corporations (and to losses recognized
in 2009 and 2010) are in the President's Fiscal 2010 Budget Proposal, S. 823 (introduced by
Senators Snowe and Baucus on April 2,2009) and H.R. 2452 (introduced by Representative
Neal on May 15,2009). The Clearing House strongly supports the enactment of an extended
carryback that would apply to all corporations, without any exclusions.

                Lengthening the carryback period for NOLs will promote economic recovery and
is appropriate tax policy in the current economic environment. It will help buffer the impact of
significant losses and enable corporations to minimize drastic actions such as lay-offs and even
liquidations. For the U.S. Government, the cost should be limited to the time value of providing
the refund to the taxpayer at this time, because the taxpayer would otherwise be able to carry the
NOLs forward and therefore have a lower tax bill in a future year.

1
       The members of The Clearing House are ABN AMRO Bank N.V.; Bank of America, National Association;
       The Bank of New York Mellon; Citibank, N.A.; Deutsche Bank Trust Company Americas; HSBC Bank
       USA, National Association; JPMorgan Chase Bank, National Association; UBS AG; U.S. Bank National
       Association; and Wells Fargo Bank, National Association.



                                    The Clearlng House Association L.L.C
The Honorable Harry Reid                             -2-                                           June 2,2009



               In the case of the banking industry, a longer NOL carryback period could be of
particular benefit in enabling the industry to fulfill its role in the economy by providing loans to
creditworthy borrowers. It would also greatly facilitate the Government's program of
encouraging banks to dispose of their legacy assets without creating losses that are unsustainable.

               The expanded carryback period would increase banks' resources, as it would for
all corporations with significant losses, at this critical time in our economy. Moreover, in the
case of banks, it would enhance their regulatory capital position, which is the fulcrum on which
additional lending can be based. The reason for this is as follo~vs.

                 In determining a bank's Tier 1 capital for Federal bank regulatory purposes, the
potential tax benefit of NOLs is reflected as an asset (i.e., the potential tax reduction or refund is
recorded as a "deferred tax asset" or "DTA"). If the NOL can be carried back, the related DTA
is then fully reflected in Tier 1 capital. In contrast, an NOL that is to be carried forward will be
reflected in Tier 1 capital only to the extent the NOL is expected to be realized within the next 12
months (and does not exceed 10% of Tier 1 capital). Thus, an expanded NOL carryback period
increases the amount of DTAs that can be reflected in Tier 1 capital2 Because many banks
(including some of the country's largest banks) have significant NOLs, the magnitude of which
may continue to grow in the near future, this action will significantly improve banks' capital
positions at the present time when it is most needed, as opposed to at a point in the future.

                The Stimulus Act included the extension of the NOL carryback because it was
expected to have a positive effect on the country's economy. That positive effect would be
significantly greater if the provision were made applicable to all taxpayers, including all financial
institutions. We believe that providing the extended carryback to all financial institutions,
regardless of size, including those that received TARP assistance, will hasten the recovery of our
economy.



               The Clearing House appreciates your consideration of these comments. If you
have any questions or if the members of The Clearing House can assist you in any way, please
contact me at (212) 612-9205.

                                                                       Very truly yours,




2
       The 10% limit applies only to a bank's net DTAs remaining after considering calry back capacity. So,
       canying back a greater portion of a bank's NOLs leaves more room for other DTAs and any remaining
       (canyfonvard) NOLs to be reflected in Tier I capital under the 10% limitation. Other types of DTAs
       include the future tax benefits associated with loan loss reserves, another item that is growing for banks
                                                                                               Norman R. Nelson
                                                                                                General Counsel
                                                                                             450 West 33rd Street
                                                                                             New York, NY 1OOOl
                                                                                                tele 212.612.9205




     THE CLEARINGHOUSE,
     Advancing Payment Solutions Worldwide




                                                                            June 2,2009


The Honorable John Boehner
Minority Leader
United States House of Representatives
1011 Longworth House Office Building
Washington, DC 205 15

               Re:      Five-year Ca~~vbackNet Operating Losses
                                         of

Dear Congressman Boehner:

               The Clearing House Association L.L.C., an association of major banks,' urges
you to support the enactment of a provision that would lengthen the net operating loss ("NOL")
carryback period from two years to five years for all cosporations, including all financial
institutions.

               The American Recovery and Reinvestment Act of 2009 (the "Stimulus Act")
lengthened the NOL carryback period (for losses recognized in 2008) from two to five years, but
only for corporations with less than $15 million in gross receipts. As you know, proposals to
apply that extended carryback to a much broader group of cosporations (and to losses recognized
in 2009 and 2010) are in the President's Fiscal 2010 Budget Proposal, S. 823 (introduced by
Senators Snowe and Baucus on April 2,2009) and H.R. 2452 (introduced by Representative
Neal on May 15,2009). The Cleasing House strongly supports the enactment of an extended
carryback that would apply to all cosporations, without any exclusions.

                Lengthening the carryback period for NOLs will promote economic recovely and
is appropriate tax policy in the current economic environment. It will help buffer the impact of
significant losses and enable corporations to minimize drastic actions such as lay-offs and even
liquidations. For the U.S. Government, the cost should be limited to the time value of providing
the refund to the taxpayer at this time, because the taxpayer would otherwise be able to carry the
NOLs folward and therefore have a lower tax bill in a hture year.

1
       The members of The Clearing Honse are ABN AMRO Bank N.V.; Bank of America, National Association;
       The Bank of New York Mellon; Citibank, N.A.; Deutsche Bank Trust Company Americas; HSBC Bank
       USA, National Association; JPMorgan Chase Bank, National Association; UBS AG; U.S. BankNational
       Association; and Wells Fargo Bank, National Association.



                                     The Cleorlng House Association L.L.C
The Honorable John Boehner                           -2-                                           June 2,2009



               In the case of the banking industry, a longer NOL cii~yback      period could be of
particular benefit in enabling the industry to fulfill its role in the economy by providing loans to
creditworthy borrowers. It would also greatly facilitate the Government's program of
encouraging banks to dispose of their legacy assets without creating losses that we unsustainable.

               The expanded carryback period would increase banks' resources, as it would for
all corporations with significant losses, at this critical time in our economy. Moreover, in the
case of banks, it would enhance their regulatory capital position, which is the fulcmm on which
additional lending can be based. The reason for this is as follows.

                 In determining a bank's Tier 1 capital for Federal bank regulatory purposes, the
potential tax benefit of NOLs is reflected as an asset (ie.,the potential tax reduction or refund is
recorded as a "deferred tax asset" or "DTA"). If the NOL can be carried back, the related DTA
is then fully reflected in Tier 1 capital. In contrast, an NOL that is to be carried forward will be
reflected in Tier 1 capital only to the extent the NOL is expected to be realized within the next 12
months (and does not exceed 10% of Tier 1 capital). Thus, an expanded NOL carryback period
increases the amount of DTAs that can be reflected in Tier 1 capitaL2 Because many banks
(including some of the country's largest banks) have significant NOLs, the magnitude of which
may continue to grow in the near future, this action will significantly improve banks' capital
positions at the present time when it is most needed, as opposed to at a point in the future.

                The Stimulus Act included the extension of the NOL carryback because it was
exvected to have a ~ositive
                     z
                              effect on the countrv's economv. That oositive effect would be
significantly greater if the provision were made applicable to all taxpayers, including all financial
institutions. We believe that providing the extended carryback to all financial institutions,
regardless of size, including those thatreceived TAW assistance, will hasten the recovery of our
economy.



               The Clearing House appreciates your consideration of these comments. If you
have any questions or if the members of The Clearing House can assist you in any way, please
contact me at (212) 612-9205.

                                                                       Very truly yours,




2
       The 10% limit applies only to a bank's net DTAs remaining after considering carry back capacity. So,
       canying back a greater portion of a bank's NOLs leaves more room for other DTAs and any remaining
       (canyfonvard) NOLs to be reflected in Tier I capital under the 10% l i t a t i o n . Other types of DTAs
       include the future tax benefits associated with loan loss reserves, another item that is growing for banks
                                                                                               Norman R. Nelson
                                                                                                General Counsel      I
                                                                                                                     I
                                                                                                                     !
                                                                                             450 West 33rd Street
                                                                                             New York, NY 1WOl
                                                                                                tele 212.61 2.9205   ~
     THE CLEARING
                HOUSE,
     Advancing Payment Solutions Worldwide




                                                                      June 2,2009


The Honorable Mitch McConnell
Minority Leader
United States Senate
361-A Russell Senate Office Building
Washington, DC 205 10

               Re:      Five-year Carryback of Net Operating Losses

Dear Senator McConnell:

               The Clearing House Association L.L.C., an association of major banks,' urges
you to support the enactment of a provision that would lengthen the net operating loss ("NOL")
carryback period from two years to five years for all corporations, including all financial
institutions.

               The American Recoverv and Reinvestment Act of 2009 (the "Stimulus Act")
lengthened the NOL cal-ryback period (for losses recognized in 2008) from two to five years, but
                                                                                  proposals to
only for corporations with less than $15 million in gross receipts. As you know, . .
apply that extended carryback to a nluch broader g1'oup of corporations (and to losses recognized
in 2009 and 2010) are in the President's Fiscal 2010 Budget Proposal, S. 823 (introduced by
Senators Snowe and Baucus on April 2,2009) and H.R. 2452 (introduced by Representative
Neal on May 15,2009). The Clearing House strongly supports the enactment of an extended
cassyback that would apply to all corporations, without any exclusions.

                Lengthening the carryback period for NOLs will promote economic recovely and
is appropriate tax policy in the cn~rent economic environment. It will help buffer the impact of
significant losses and enable corporations to minimize drastic actions such as lay-offs and even
liquidations. For the U.S. Government, the cost should be limited to the time value of providing
the refund to the taxpayer at this time, because the taxpayer would otherwise be able to carry the
NOLs forward and therefore have a lower tax bill in a future year.

I
                                  -
       The members of The Clearing House are ABN AMRO Bank N.V.: Bank of America. National Association:
       The Bank of New York Mellon; Citibank, N.A.; Deutsche Bank Trust Company Americas; HSBC Bank
       USA, National Association; JPMorgan Chase Bank, National Association; UBS AG; U.S. Bank National
       Association; and Wells Fargo Bank, National Association.



                                      The Clearing House Association L.L.C.
The Honorable Mitch McConnell                        -2-                                           June 2,2009



               In the case of the banking industry, a longer NOL carryback period could be of
particular benefit in enabling the industry to fulfill its role in the economy by providing loans to
creditworthy borrowers. It would also greatly facilitate the Government's program of
encouraging banks to dispose of their legacy assets without creating losses that are unsustainable.

               The expanded carryback period would increase banks' resources, as it would for
all corporations with significant losses, at this critical time in our economy. Moreover, in the
case of banks, it would enhance their regulatory capital position, which is the fulcrum on which
additional lending can be based. The reason for this is as follows.

                 In determining a bank's Tier 1 capital for Federal bank regulatory purposes, the
potential tax benefit of NOLs is reflected as an asset (i,e., the potential tax reduction or refund is
recorded as a "deferred tax asset" or "DTA"). If the NOL can be carried back, the related DTA
is then fully reflected in Tier 1 capital. In contrast, an NOL that is to be carried forward will be
reflected in Tier 1 capital only to the extent the NOL is expected to be realized within the next 12
months (and does not exceed 10% of Tier 1 capital). Thus, an expanded NOL carryback period
increases the amount of DTAs that can be reflected in Tier 1 capital2 Because many banks
(including some of the country's largest banks) have significant NOLs, the magnitude of which
may continue to grow in the near future, this action will significantly improve banks' capital
positions at the present time when it is most needed, as opposed to at a point in the future.

                The Stimulus Act included the extension of the NOL carryback because it was
expected to have a positive effect on the country's economy. That positive effect would be
significantly greater if the provision were made applicable to all taxpayers, including all financial
institutions. We believe that providing the extended carryback to all financial institutions,
regardless of size, including those that received TARP assistance, will hasten the recovery of our
economy.



               The Clearing House appreciates your consideration of these comments. If you
have any questions or if the members of The Clearing House can assist you in any way, please
contact me at (212) 612-9205.

                                                                       Very truly yours,




2
       The 10% limit applies only to a bank's net DTAs remaining after considering carry back capacity. So,
       carrying back a greater portion of a bank's NOLs leaves more room for other DTAs and any remaining
       (canyfonuard) NOLs to be reflected in Tier I capital under the 10% limitation. Other types of DTAs
       include the future tax benefits associated with loan loss reserves, another item that is growing for banks
                                                                                                Norman R. Nelson     iI
                                                                                                 General Counsel
                                                                                                                     I
                                                                                                                     !
                                                                                              450 West 33rd Street
                                                                                              New Yo*, NY 10GQI
                                                                                                 tele 212.612.9205   i
                                                                                                                     i
     THECLEARING HOUSE,
     Advancing Payment Solutions Worldwide



                                                                    June 2,2009


The Honorable Charles E. Schumer
United State Senate
3 13 Hart Senate Office Building
Washington, D.C. 20510


               Re:      Five-year Carryback of Net Operating Losses

Dear Senator Schumer:

               The Clearing House Association L.L.C., an association of major banks,' urges
you to support the enactment of a provision that would lengthen the net operating loss ("NOL")
carryback period from two years to five years for all corporations, including all financial
institutions.

               The American Recovery and Reinvestment Act of 2009 (the "Stimulus Act")
lengthened the NOL carryback period (for losses recognized in 2008) from two to five years, but
only for corporations with less than $15 million in gross receipts. As you know, proposals to
apply that extended carryback to a much broader group of corporations (and to losses recognized
in 2009 and 2010) are in the President's Fiscal 2010 Budget Proposal, S. 823 (introduced by
Senators Snowe and Baucus on April 2,2009) and H.R. 2452 (introduced by Representative
Neal on May 15,2009). The Clearing House strongly suppoiTs the enactment of an extended
carryback that would apply to all corporations, without any exclusions.

                Lengthening the carryback period for NOLs will promote economic recovery and
is appropriate tax policy in the current economic environment. It will help buffer the impact of
significant losses and enable corporations to minimize drastic actions such as lay-offs and even
liquidations. For the U.S. Government, the cost should be limited to the time value of providing
the refund to the taxpayer at this time, because the taxpayer would otherwise be able to carry the
NOLs forward and therefore have a lower tax bill in a future year.

1
       The members of The Clearing House are ABN AMRO Bank N.V.; Bank of America, National Association;
       The Bank of New York Mellon; Citibank, N.A.; Deutsche Bank T ~ u sCompany Americas; HSBC Bank
                                                                         t
       USA, National Association; JPMorgan Chase Bank, National Association; UBS AG; U.S. BankNational
       Association; and Wells Fargo Bank, National Association.



                                    The Clearing House Asrociotion L.L.C,
The Honorable Charles E. Schumer                     -2-                                           June 2,2009


               In the case of the banking industry, a longer NOL carryback period could be of
particular benefit in enabling the industry to fulfill its role in the economy by providing loans to
creditworthy borrowers. It would also greatly facilitate the Government's program of
encouraging banks to dispose of their legacy assets without creating losses that are unsustainable.

               The expanded carryback period would increase banks' resources, as it would for
all corporations with significant losses, at this critical time in our economy. Moreover, in the
case of banks, it would enhance their regulatory capital position, which is the fulcrum on which
additional lending can be based. The reason for this is as follows.

                 In determining a bank's Tier 1 capital for Federal bank regulatory purposes, the
potential tax benefit of NOLs is reflected as an asset (i.e., the potential tax reduction or refund is
recorded as a "deferred tax asset" or "DTA"). If the NOL can be cal-sied back, the related DTA
is then fully reflected in Tier 1 capital. In contrast, an NOL that is to be cai~ied forward will be
reflected in Tier 1 capital only to the extent the NOL is expected to be realized within the next 12
months (and does not exceed 10% of Tier 1 capital). Thus, an expanded NOL carryback period
increases the amount of DTAs that can be reflected in Tier 1 capita^.^ Because many banks
(including some of the country's largest banks) have significant NOLs, the magnitude of which
may continue to grow in the near future, this action will significantly improve banks' capital
positions at the present time when it is most needed, as opposed to at a point in the fi~ture.

                The Stimulus Act included the extension of the NOL carryback because it was
expected to have a positive effect on the country's economy. That positive effect would be
significantly greater if the provision were made applicable to all taxpayers, including all financial
institutions. We believe that providing the extended carryback to all financial institutions,
regardless of size, including those that received TARP assistance, will hasten the recovery of our
economy.



               The Clearing House appreciates your consideration of these comments. If you
have any questions or if the members of The Clearing House can assist you in any way, please
contact me at (212) 612-9205.

                                                                       Very truly yours,




2
       The 10% limit applies only to a bank's net DTAs remaining after considering cany back capacity. So,
       carrying back a greater portion of a bank's NOLs leaves more room for other DTAs and any remaining
       (carryforward) NOLs to be reflected in Tier I capital under the 10% limitation. Other types of DTAs
       include the future tax benefits associated with loan loss reserves, another item that is growing for banks.
                                                                                                Norman R. Nelson
                                                                                                 General Counsel

                                                                                              450 West 33rd Street
                                                                                                           Y
                                                                                              New York. N 10001
                                                                                                 tele 212.612.9205




     THE CLEARING HOUSE,
     Advancing Payment Solutions Worldwide



                                                                    June 2,2009

The Honorable Dave Camp
Ranking Member
Committee on Ways & Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington D.C. 20515

               Re:      Five-year Carsvback of Net Operating Losses

Dear Representative Camp:

               The Clearing House Association L.L.C., an association of major banks,' urges
you to suppolt the enactment of a provision that would lengthen the net operating loss ("NOL")
carryback period from two years to five years for all corporations, including all financial
institutions.

               The American Recovery and Reinvestment Act of 2009 (the "Stimulus Act")
lengthened the NOL carryback period (for losses recognized in 2008) from two to five years, but
only for corporations with less than $15 million in gross receipts. As you know, proposals to
apply that extended carryback to a much broader group of colporations (and to losses recognized
in 2009 and 2010) are in the President's Fiscal 2010 Budget Proposal, S. 823 (introduced by
Senators Snowe and Baucus on April 2,2009) and H.R. 2452 (introduced by Representative
Neal on May 15,2009). The Clearing House strongly supports the enactment of an extended
carryback that would apply to all corporations, without any exclusions.

                Lengthening the carryback period for NOLs will promote economic recovely and
is appropriate tax policy in the current economic environment. It will help buffer the impact of
significant losses and enable corporations to minimize drastic actions such as lay-offs and even
liquidations. For the U.S. Government, the cost should be limited to the time value of providing
the refund to the taxpayer at this time, because the taxpayer would otherwise be able to carry the
NOLs folward and therefore have a lower tax bill in a future year.
1
       The members of The Clearing House are ABN AMRO Bank N.V.; Bank of America, National Association;
       The Bank of New York Mellon; Citibank, N.A.; Deutsche Bank Trust Company Americas; HSBC Bank
       USA, National Association; JPMorgan Chase Bank, National Association; UBS AG; U.S. Bank National
       Association; and Wells Fargo Bank, National Association.



                                    The Clearing House Association L.L.C.
The Honorable Dave Camp                              -2-                                           June 2,2009


               In the case of the banking industry, a longer NOL carryback period could be of
pasticular henefit in enabling the industry to fulfill its role in the economy by providing loans to
creditworthy borrowers. It would also greatly facilitate the Government's program of
encouraging banks to dispose of their legacy assets without creating losses that are unsustainable.

               The expanded carryback period would increase hanks' resources, as it would for
all corporations with significant losses, at this critical time in our economy. Moreover, in the
case of banks, it would enhance their regulatory capital position, which is the fulcrum on which
additional lending can be based. The reason for this is as follows.

                 In determining a bank's Tier 1 capital for Federal bank regulatory purposes, the
potential tax henefit of NOLs is reflected as an asset (i.e.,the potential tax reduction or refund is
recorded as a "deferred tax asset" or "DTA"). If the NOL can be carried back, the related DTA
is then fully reflected in Tier 1 capital. In contrast, an NOL that is to be carried forward will be
reflected in Tier 1 capital only to the extent the NOL is expected to be realized within the next 12
months (and does not exceed 10% of Tier 1 capital). Thus, an expanded NOL carryback period
increases the amount of DTAs that can be reflected in Tier 1 capitaL2 Because many banks
(including some of the country's largest banks) have significant NOLs, the magnitude of which
may continue to grow in the near future, this action will significantly improve banks' capital
positions at the present time when it is most needed, as opposed to at a point in the future.

                The Stimulus Act included the extension of the NOL carryback because it was
expected to have a positive effect on the country's economy. That positive effect would be
significantly greater if the provision were made applicable to all taxpayers, including all financial
institutions. We believe that providing the extended carryback to all financial institutions,
regardless of size, including those that received TAW assistance, will hasten the recovery of our
economy.



               The Clearing House appreciates your consideration of these comments. If you
have any questions or if the members of The Clexing House can assist you in any way, please
contact me at (212) 612-9205.

                                                                       Very truly yours,




2
       The 10% limit applies only to a bank's net DTAs remaining after considering carry back capacity. So,
       canying back a greater portion of a bank's NOLs leaves more room for other DTAs and any remaining
       (ca~lyforward)  NOLs to be reflected in Tier I capital under the 10% limitation. Other types of DTAs
       include the future tax benefits associated with loan loss reserves, another item that is growing for banks
                                                                                               Norman R. Nelson
                                                                                                General Counsel
                                                                                             450 West 33rd Street
                                                                                             New York, NY 10001
                                                                                                tele 212.612.9205




     THE CLEARINGHOUSE,
     Advancing Payment Solutions Worldwide



                                                                        June 2,2009


The Honorable Richard E. Neal
United States Senate
2208 Rayburn House Office Building
Washington, D.C. 20515

               Re:      Five-year Carryback of Net Operating Losses

Dear CongressmanNeal:

               The Clearing House Association L.L.C., an association of major banks,' urges
you to support the enactment of a provision that would lengthen the net operating loss ("NOL")
carryback period from two years to five years for all corporations, including all financial
institutions.

               The American Recovery and Reinvestment Act of 2009 (the "Stimulus Act")
lengthened the NOL carryback period (for losses recognized in 2008) from two to five years, but
only for corporations with less than $15 million in gross receipts. As you know, proposals to
apply that extended carryback to a much broader group of corporations (and to losses recognized
in 2009 and 2010) are in the President's Fiscal 2010 Budget Proposal, S. 823 (introduced by
Senators Snowe and Baucus on April 2,2009) and H.R. 2452 (introduced by you on
May 15,2009). The Clearing House strongly supports the enactment of an extended carryback
that would apply to all corporations, without any exclusions.

                Lengthening the carryback period for NOLs will promote economic recovery and
is appropriate tax policy in the current economic environment. It will help buffer the impact of
significant losses and enable corporations to minimize drastic actions such as lay-offs and even
liquidations. For the U.S. Government, the cost should be limited to the time value of providing
the refund to the taxpayer at this time, because the taxpayer would otherwise be able to carry the
NOLs forward and therefore have a lower tax bill in a future year.


I
       The members of The Clearing House are ABN AMRO Bank N.V.; Bank of America, National Association;
       The Bank of New York Mellon; Citibank, N.A.; Deutsche Bank Trust Company Americas; HSBC Bank
       USA, National Association; JPMorgan Chase Bank, National Association; UBS AG; U.S. Bank National
       Association; and Wells Fargo Bank, National Association.



                                    The Clearing House Association L.L.C.
The Honorable Richard E. Neal                        -2-                                           June 2,2009


               In the case of the banking industry, a longer NOL carryback period could be of
particular benefit in enabling the industry to fulfill its role in the economy by providing loans to
creditworthy borrowers. It would also greatly facilitate the Government's program of
encouraging banks to dispose of their legacy assets without creating losses that are unsustainable.

               The expanded carryback period would increase banks' resources, as it would for
all corporations with significant losses, at this critical time in our economy. Moreover, in the
case of banks, it would enhance their regulatory capital position, which is the fulcrum on which
additional lending can be based. The reason for this is as follows.

                 In determining a hank's Tier 1 capital for Federal bank regulatory purposes, the
potential tax benefit of NOLs is reflected as an asset (i.e.,the potential tax reduction or refund is
recorded as a "deferred tax asset" or "DTA"). If the NOL can be c a i e d back, the related DTA
is then fully reflected in Tier 1 capital. In contrast, an NOL that is to be carried forward will be
reflected in Tier 1 capital only to the extent the NOL is expected to be realized within the next 12
months (and does not exceed 10% of Tier 1 capital). Thus, an expanded NOL carryback period
increases the amount of DTAs that can be reflected in Tier 1 capital2 Because many banks
(including some of the country's largest banks) have significant NOLs, the magnitude of which
may continue to grow in the near future, this action will significantly improve banks' capital
positions at the present time when it is most needed, as opposed to at a point in the future.

                The Stimulus Act included the extension of the NOL carryback because it was
expected to have a positive effect on the country's economy. That positive effect would be
significantly greater if the provision were made applicable to all taxpayers, including all financial
institutions. We believe that providing the extended carryback to all financial institutions,
regardless of size, including those that received TARP assistance, will hasten the recovery of our
economy.


               The Clearing House appreciates your consideration of these comments. If you
have any questions or if the members of The Clearing House can assist you in any way, please
contact me at (212) 612-9205.

                                                                       Very tr111y yours,




2
       The 10% limit applies only to a bank's net DTAs remaining after considering carry back capacity. So,
       carrying back a greater portion of a bank's NOLs leaves more room for other DTAs and any remaining
       (carryforward) NOLs to be reflected in Tier I capital under the 10% limitation. Other types of DTAs
       include the future tax benefits associated with loan loss reserves, another item that is growing for banks.

								
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