In the House, Reps. Steve Israel, D-N.Y., and Tim Ryan, D-Ohio, introduced a bill that would that would tax at 100 percent bonuses above $100,000 paid by companies that have received federal bailout money.
Not that the AIG’ers deserve the money, but true or false, the last 24 hours have turned into a game of elected officials attempting to one up each other with submissions for how, if we can’t stop the bonuses, we can make things as uncomfortable as possible for those on the receiving end. In which case, it’s pretty obvious that we gather everyone up, head out to a cattle ranch in Montana and throw their bonuses out the window of a corporate jet (from a TARP-taking bank) in one and five dollar denominations. They’ll still get it, but it’ll be hard, and you know at least a handful of individuals will deem it not worth the effort. Or there’s always this route. The first Congressman or Lady to seriously suggest receives a cheesesteak, on us.
Congress threatens to tax AIG executives’ bonuses [AP]
Betcha Goldman Sachs likes AIG a bunch now.
Great! This is fine and within the rule of law. I still think that the AIG employees in question were grossly negligent in constructing derivative contracts while ignoring or not understanding wrong-way risk. Therefore, said employees could easily be dismissed “for cause” and the bonuses could thus be recouped via the court system. That is probably the best way to proceed.
I’m waiting for the start of the mob violence against the AIG bonus recipients. Actually, I’m looking forward to it. We need some justice around here.
Atlas shat.
Seriously is there any reason to work on Wall St right now?
Muwahahaha, bow down before the taxation power, fools.
@4 FTW!
If you think you are safe working for non-TARP institutions, think again. This is a free market baby: the bid on bankers will keep going down. Short bankers!
City Field +
Liddy/Herzhog +
http://www.youtube.com/watch?v=SIxm3Z7s5ZI
= WIN!!!
Why stop at their bonuses ?
Take away their cars and make them take public transportation, do not let them drink good beer and give the PBR, if they have full cable TV packages MAKE them downgrade to basic. If they are cought having any fun, or even at the crack of a smile, FINE THEM !
If the American public has to live like that, SO SHOULD THEY !
If they resist … charge them with TREASON !
@5, no. The problem is, of course, that if you’re not working on Wall St., you’re stuck in an office with idiots like @2 who understand neither finance nor law.
AIG needs to pay those bonuses pronto to try and squeak in before the tax.
100% tax over 100K!?!? lol. And then where will the proceeds from that revenue go? To GM’s “profitable” business challenges? Bank of America’s “solvency” crisis? This is just one big circle jerk…
@2
But that engenders another quandary. The individuals aforementioned reflect the best and brightest “talent” within AIG. The mass departure of such a decorated braintrust would surely cripple the company…lol…
Only Bess could have come up with “let’s make sweet whore love to AIG execs”
Bess for Prez in 2012!!
The 100% tax on the >$100K bonuses is a great idea. Not only will we put nails in the AIG recipients, but we’ll get all the ones at the other TARP banks too. This is brilliant.
@11 – I hope you don’t work for any Wall St. firm that I do business with. If you applied for a job with my firm, I would not hire you. People like you are precisely why we’re in this mess, and the sooner you get laid off, the better for America.
@11 Moron, this tax will be meant for institutions like AIG. IF this passes (highly unlikely), nothing would “sneak” through.
@11,
“AIG needs to pay those bonuses pronto to try and squeak in before the tax.”
FYI, Congress can easily make the new selective tax law retroactive to the begining of the year. Not hard to do.
Maybe you’re the one “who understands neither finance nor law”.
@15, glad to hear the urinal cake replacement business is going well. GS on Tuesdays, Citi Wednesdays, no?
If Congress wanted to give somebody the power to renegotiate/restructure contracts, like a bankruptcy court has, then it should have put it in the goddamn law in the first place. “We didn’t think it all the way through” is not how you are supposed to govern. It’s hard to tell who’s screwing up more here, the AIG guys who dug the hole or the government shoveling money into it with reckless abandon.
11 is mouthbreather from Yahoo.
Taxes can be freaking retroactive, nevermind applied to the current taxable year (2009). Ex post facto only applies to criminal law.
As long as it raises revenue, the government can do it to you.
-
I suppose AIG employees could always evade tax, but that seems like a very poor idea with a discreet set of highly loathed individuals. Likely to result in federal prison and fines.
Give me back that fillet-o fish!
Give me back that fish…
Give me back that fillet-o fish!
Give me back that fish…
@12, @2 here,
[But that engenders another quandary. The individuals aforementioned reflect the best and brightest "talent" within AIG. The mass departure of such a decorated braintrust would surely cripple the company...lol...]
Ya, I know. It is not like the remaining ~5000 contracts could be closed out with a halfway competent team of lawyers and accountants. Hiring and running such a team would probably cost less than $90M.
18 Remember the part in American Psycho where Bateman encounters the guy that’s been porking his girlfriend at the urinal, takes the cake home, covers it with chocolate syrup, puts it in a Godiva box and convinces his girlfriend to eat it by making here think that a ring will be coming soon? She says, “I really can’t finish, its so rich and minty…”.
Someone needs to explain the Laffer curve to these guys. And if they do in fact already understand it, then explain to them the meaning of the expression “cutting off your nose to spite your face”.
@18 – Most people in finance are hardworking and honest and just trying to do the best they can. And then there are douchebags like you. You people need to take a hint from Chuck Grassley.
ROFL, Laffer curve?
Take that discredited BS elsewhere. And don’t ever try to work for me, because I’ll fire you on the spot.
Laffer Curve = Martingale betting.
How the f* is the law going to target specific employees of specific companies and not capture every frickin’ company that received TARP funds?! The assholes in DC should have their pay taxed at 91% until all the banks pay back the TARP funds.
25: 23 here. I generally agree with you on the Laffer curve (that its a crock). I do however think that it works on the extreme right side. That is, if you start taxing incremental revenues at 100%, no one will generate any incremental revenues and therefore there will be no additional taxes to collect. Which got me to my second comment: that would be like cutting off your nose to spite you face.
Very creative. Just as the rocket scientists created derivatives to evade taxation and regulations, now Congressmen are creating special tax laws to evade contract covenants. Next the Congressmen should create a way through tax law or, say a creative interpretation of fraudulent conveyance to clawback past bonuses.
@23
I think the point is that AIG employees are NOT generating any revenue, period. In fact, they are generating losses, billions of dollars in losses that the government is absorbing. This whole situation has nothing to do with the Laffer curve.
Call me crazy, but doesn’t the fact that these AIG Financial Products people are in, you know, ENGLAND, sort of pose a problem for any Congressional scheme to tax their bonuses away?
@30
I think the major problem with many people on this site is that they view the government as just another business or a business partner. The government is not a business and thinking it is or acting like it is is not going to help anyone. The government does not have to do due diligence, it can democratically change the rules of the game, and it can resort to violence when needed. Therefore, the government could simply erect a 100% export tariff on all non-salary payments made to foreign employees by companies that have received federal bailout money. Problem solved.
So, I guess that this basically guarantees that AIG will never be able to recruit qualified talent at market prices. Who’s going to take a position at AIG (at any comp level) if employment contracts are no longer valid?
It strikes me that if the gov wanted to kill AIG, it would have been a whole lot cheaper to let them die in the first place as opposed to bailing them out, looking forward to a mass talent exodus and then dying on the vine in a long painful process due to their inability to recruit a qualified team.
@32,
AIG has no qualified talent in the Special Products Group, nor have they ever had any there.
Now, with the above thought in mind, read your #32 post again. Sounds like gibberish, doesn’t it?
@33
Fine, say that AIG has never had any qualified talent in their Special Products Group – this means nothing in the context of #32′s point.
Assuming they don’t want to shutter the Special Products Group, they will then need to recruit “qualified” talent, yes?
Good luck with that.
@34
With 10% unemployment, AIG will have no trouble obtaining the talent needed to wind-down AIG’s SPG. Furthermore, the past employees of AIG’s SPG failed to perform in accordance with their employment agreements. The U.S. Government is simply enforcing the terms of these agreements since AIG has failed to do so. That is, the past employees clearly committed acts of gross negligence that were detrimental to AIG. Future employees of AIG have nothing to fear as long as they perform in accordance with their employment agreements.
@31 – @35
Forget about all the talent shit. It has nothing to do with that. This is about whether we want the government to determine if a contractual obligation will be honored or not. I say no. AIG is not bankrupt, so the contract should be honored — Even though the bonus is outrageous as it is.
Wait, let me make sure I understand . . .
AIG’s contracts with its deserving employees need to be honored as written.
But GM’s contracts with the UAW and its loser membership need to be torn up.
Got it. Thanks.
@36
EVERY employment agreement has a “for cause” agreement that stipulates behavior that makes the whole contract null and void. If this is not a case for when such a clause should be executed, I don’t know what is. If AIG won’t sue their employees over their breech of contract (i.e. the gross negligence they perpetrated on AIG), then the government (i.e. owner) of AIG must do something!
@37 UAW contracts will not be forceably changed. They will be negotiated down. Right?
When will congress try to stop the payouts to the Washington Wizards players? That team sucks and yet Jamison is pulling down +$9mm a year.
Get fucking focused
#39 here again….I’d be willing to play for the Wizards for $150k year
Time for Jamison to apologize and kill himself on the Captial steps.
@35
I guess I didn’t realize that the Fed wanted to wind down the operation. Sure, if it’s a liquidation scenario as opposed to a going concern, no one cares about recruiting.
Unless you have a copy of the employment agreements, you have no clue what constitutes a breach. I suspect that these “acts of gross negligence” you refer to were probably part of their responsibilities as outlined in their job description.
@39 Probably when the Washington Wizards players start scoring goals against their own goalie thereby causing the franchise to fail with the result that the taxpayers have to take it on in order to prevent the entire NHL from going under.
[Note: there is a difference between playing poorly and a failure to play correctly.]
@41 Hedging wrong-way risk should be a core competency of anyone working in finance. Failure to do so is gross negligence.
@42
Should be and in your contract are two different things. Further, I doubt that all employees receiving bonuses were individually responsible for group hedging strategies.
HFS! Is this really what it’s coming to? Is paying bonuses to people that did a rather poor job ridiculous and almost incomprehensible to 95% of the population? Yes. But, there are contracts and I don’t think it’s the government’s job to start screwing with private contracts between two private parties. If they didn’t like the contracts, they shouldn’t have “purchased” equity. Or, maybe they just didn’t do their due diligence and now don’t like the result.
The government is supposed to be the referee, not the heach coach, offensive coordinator, and quarterback all rolled into one (not to mention the guy with a gun to the head of the opposing team’s head coach as well).
@39 – Wizards =/= Capitals. Actually, Ovechkin is probably better at basketball than half the Wizards.
@44
Wrong. In this situation it is exactly the government’s job. In fact, it is pretty much why government exists. The contracts, and their ramifications, are no longer confined to two private parties.