THE BURNED OVER DISTRICT

The Big Swinging Dicks on Wall St are looking for ways to pillage the poor areas of America. To do so they plan to use a little noticed part of The 2017 Trump Tax Scam that gives them huge tax breaks for 'investing' in those areas.

Hedge funds, investment banks and money managers are trying to raise tens of billions of dollars this year for so-called opportunity funds, a creation of President Trump’s 2017 tax package meant to steer money to poor areas by offering potentially large tax breaks.

Little noticed at first, the provision has unleashed a flurry of investment activity by wealthy families, some of Wall Street’s biggest investors and other investors who want to put money into projects ostensibly meant to help struggling Americans. The ranks of those starting such funds include Anthony Scaramucci, the New York hedge fund executive who served briefly as Mr. Trump’s communications director.

More than 80 of the funds have sprung up since January 2018, even though the Trump administration has not finalized regulations governing them. Managers of the funds are seeking to raise huge sums of money by pitching investors on a combination of outsize returns and a feel-good role in fighting poverty.

The flood of capital is raising hopes as well as concerns. Those who championed the provision, which provides for a hefty tax break on long-term investments, believe the money can help distressed towns and neighborhoods that are still feeling the effects of the financial crisis and have barely benefited from the nine-year economic expansion. Skeptics worry that the funds will mostly target real estate and other projects that probably would have attracted investment even without the tax break, and may not deliver the returns being dangled.

The provision that created the funds was added to the tax law by Senator Tim Scott, Republican of South Carolina, and had been supported by Democrats and Republicans in previous legislation. It provides capital gains tax relief for investors who finance projects in about 8,700 so-called opportunity zones spread across the 50 states, the District of Columbia and Puerto Rico.

Local officials selected the zones from a group of areas deemed eligible for the designation under a federal formula that factors in income and poverty levels. The federal government has not finished setting guidelines for what types of projects qualify or what information fund managers must provide to investors and to the government.

The designated areas include heavily distressed tracts in cities like Detroit and Gary, Ind. But some zones are in gentrifying areas like the old downtown section of Las Vegas and parts of Long Island City, Queens, where Amazon said it would build a huge corporate campus before reversing course last week.

The advent of the funds has spawned conferences around the country and has drawn interest from a variety of financial players. So far, most of the funds have focused on real estate investments. Many of the Wall Street funds are geared toward major metropolitan areas on the East and West Coasts, particularly New York City. That has fueled concern that the tax break could help regions that already enjoy substantial investment.

Right now it is hard to lnow what will happen but even well intentioned investors will have to face the Law of Unintended Consequences. It is not hard to imagine that few of the investors will be well intentioned.