On failed REMICs

My latest column:

The Wall Street Rule is objectionable from a tax policy perspective when aggressive tax lawyers sanction a deal structure that contravenes the rules, or one that resides in a gray area but is contrary to what Congress intended.I do not think that is the case here. The Remic rules are designed to prevent operating companies from avoiding the corporate tax. Banks and other financial institutions that originate mortgages should pay the corporate tax. Passive conduits should not. The lawyers failed here because they relied too quickly on a client’s representations about the status of mortgages in the trust, not because they were overly aggressive in their interpretation of the Internal Revenue Code.

via Why a Tax Crackdown Is Not Needed on Mortgage-Backed Securities – NYTimes.com.