Catering to Tax Evaders Is a Poor Prescription for Bank Health

The banking industry may be going through consolidation, but the US is overbanked by all measures. The sheer number of banks in the US can destabilize competition and force smaller institutions within a sector to find competitive advantages.

This broad push for advantage can lead to risky endeavors, such as catering to tax evaders, as it has in the past. The IRS has indicated it will devote more than half of its $80 billion funding injection to enforcement efforts directed to “taxpayers with complex tax filings and high-dollar noncompliance” and “certain international issues.”

This can’t work in a vacuum—the IRS ...