‘I meant by “impenetrability” that we’ve had enough of that subject, and it would be just as well if you’d mention what you mean to do next, as I suppose you don’t mean to stop here all the rest of your life.’
‘That’s a great deal to make one word mean,’ Alice said in a thoughtful tone.
‘When I make a word do a lot of work like that,’ said Humpty Dumpty, ‘I always pay it extra.’
‘Oh!’ said Alice. She was too much puzzled to make any other remark.
‘Ah, you should see ’em come round me of a Saturday night,’ Humpty Dumpty went on, wagging his head gravely from side to side, ‘for to get their wages, you know.’
Rick Weber of Norton Rose Fulbright is the Editor-in-Chief of The Bond Lawyer, NABL’s quarterly journal. He writes a wonderful column on language that introduces each issue, and in the Summer 2016 issue, he posed the following question: When issuers are required to pay arbitrage profits earned on investments of tax-exempt bond proceeds to the federal government, why is it called “rebate,” when the arbitrage profits were not the federal government’s money in the first place? “In order to have a “return” or “refund” or “pay-back” of funds to the US government,” Weber notes, “the funds must start there.” We venture an explanation below.
(Before we begin, a hearty “thank you” to our retired partner Jack Browning, who remains a boundless source of knowledge and wisdom, the elucidator-in-chief of hopelessly opaque topics like single family mortgage bonds, and a dear friend, for collaborating with me on this effort.)
These days, there are literally a million examples of words in the dictionary that mean the opposite of what they originally meant. “Rebate,” as used in this context, is one of them. What we now call “rebate” was once the payment of excess earnings on investments of tax-exempt single family mortgage bond proceeds that issuers made to the federal government instead of giving mortgagors a rebate on their mortgage interest payments.