Government welcomes offshore investors, while calling for crackdown on tax havens

By Laurie Bennett

December 6, 2010 at 9:48am
The bailout: who profited?

Records released last week by the Federal Reserve provide a new perspective on government tolerance of offshore tax havens.

Of the 169 foreign investors in a stimulus program designed to re-invigorate consumer lending, the majority - 102 - were based in the Cayman Islands. Twelve others were based in Bermuda.

The Muckety map above shows some of the borrowers with investors in the Caymans. Double-click on any borrower, and you’ll see its investors.

In March 2009, the government launched the Term Asset-Backed Securities Loan Facility, or TALF. The program provided low-cost, low-risk loans to companies buying bonds backed by auto and student loans. (It did not extend to real estate mortgages.)

Loans totaling more than $71 billion were approved between March 2009 and March 2010. About 20 percent of the investors in these transactions were based outside the U.S.

Some of the Fed records list individuals who invested directly in the companies receiving the loans. Most show companies investing in other companies. The chain of limited partnerships and limited liability companies often ends in the Cayman Islands.

Yet at the time that the loans were being approved, the Obama White House was calling for restrictions on offshore tax havens.

President Obama and Treasury Secretary Timothy Secretary Geithner announced their proposal in May 2009, saying some businesses and wealthy individuals were “shirking” their responsibilities.

Their plan, which has received little attention since the announcement, followed a GAO report that 83 of the 100 largest public companies in the U.S. maintained subsidiaries in tax-haven locations.

Here’s a full list of Caymans-based investors in the TALF program:

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