AIG apologists come crawling out of the woodwork

[Darth Wong]

Bonus tax: Feels good, but is it?
Running on grassroots rage, House passed a bill to recapture dollars from AIG bonuses. Senate is next. Tax experts weigh in on whether it's a smart move.

By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: March 20, 2009: 10:53 AM ET

NEW YORK (CNNMoney.com) -- Public outrage can be a potent agent for change, but it doesn't always make for great policy.

Nevertheless, that rage is a main driver behind the bonus tax legislation that the House approved on Thursday in a 328-to-93 vote.

It was drafted in the wake of news that insurer American International Group -- which has been given access to $182 billion in taxpayer aid so far -- doled out $165 million in retention bonuses to employees in its financial products division. That division was ground zero for AIG's costliest mistakes.

"Stop the thievery at Americans' expense," said House Ways and Means Chairman Charles Rangel, D-N.Y., on the House floor before the vote.

The House legislation calls for a 90% surtax to be imposed on any bonus paid after Dec. 31, 2008, by a company that received $5 billion or more in taxpayer dollars from the Troubled Asset Relief Program. The tax would need to be paid by any employee or former employee whose family income exceeds $250,000 ($125,000 for married recipients filing separately).

Here's how it would work: Affected individuals would calculate what their federal tax bill would be without the bonus and then add to that amount 90% of the total bonus received, said Tom Ochsenschlager, vice president of taxation at the American Institute of Certified Public Accountants

They'd need to add another 1.45% for the Medicare tax owed on the bonus, said David Lifson, president of the New York State Society of Certified Public Accountants.

On top of that, they would have to pay regular state and local income tax. That won't leave much in the wallet.

In fact, after factoring in state and local taxes, some people would end up owing more than they got.

"A New York City resident would have a tax greater than the bonus," Lifson said.

Feels like justice, but is it good tax policy?

From Lifson's point of view, the House tax bill isn't really tax policy. "This is bankruptcy and financial policy," he said.

His argument: If the government had allowed AIG to go bankrupt, employee contracts could have been renegotiated, or the employees could have lost not only their bonuses but their jobs.

"When the government rescued AIG for the sake of the financial system it inadvertently rescued all the contracts AIG entered into with executives," Lifson said.

What Congress is trying to do now is reclaim the bonuses through the tax code.

Of course, if tax legislation becomes law it would be seen as tax policy. And in that regard it doesn't get high marks from tax experts.

"If Congress wants to limit bonuses for employees of bailed-out companies, it should just do it. But using the Internal Revenue Code is a truly terrible idea," the Tax Policy Center's Tax Vox blog editor Howard Gleckman wrote.

To those who say it's okay because taxpayers effectively own AIG, Gleckman said: "Do we really want Congress to micromanage the business practices of this firm? That's the quickest way I know to drive the value of the company's remaining assets to zero and guarantee taxpayers will get no return on their investment."

Ochsenschlager said "it's bad policy because you're taxing [the same type of] income at a different rate than you and I are taxed at."

Not that there aren't other examples of that in the tax code.

For example, the Alternative Minimum Tax, originally intended to capture the wealthy few but now threatening to ensnare those much farther down the income scale, taxes income at different rates than the regular tax code. Lawmakers on both sides of the aisle have argued that the AMT should be overhauled or eliminated altogether. "It hasn't served its original purpose," Ochsenschlager said.
Is it legal?

Some Republicans in the House were claiming that the bonus tax measure is unconstitutional.

The tax would be retroactive to Jan. 1, 2009, and it would apply to bonuses already paid out as well as future ones. It would be limited to a group of companies that took at least $5 billion in government aid. And at least in the case of AIG, it would target bonuses received as a result of contractual obligation.

No question of constitutionality is ever resolved quickly or even conclusively. But constitutional expert Laurence Tribe of Harvard University suggested that such a provision could pass constitutional muster.

The ultimate fate of the House bill is not clear. The Senate Finance Committee on Thursday introduced its version of a bonus tax, which differs in some key ways from that of the House. For one thing, it would impose a 35% tax both on the company giving the bonus and on the individual receiving it.

Under the Senate bill, individuals would calculate their normal federal income tax bill, including the bonus, and then add 35% of the value of the bonus.

"We must act quickly on this proposal -- for the sake of the American taxpayer, for the sake of what's right to do," said Sen. Max Baucus, D-Mont., the Senate's top tax writer. "I will work with my colleagues in both the House and Senate to make sure that's what happens."

The spin-doctoring shall continue.

[General Zod]

To those who say it's okay because taxpayers effectively own AIG, Gleckman said: "Do we really want Congress to micromanage the business practices of this firm? That's the quickest way I know to drive the value of the company's remaining assets to zero and guarantee taxpayers will get no return on their investment."

Maybe they should have thought about that before accepting the bailouts.

[Kanastrous]

This 90% / $250,000 / $125,000 is total bullshit anyway. It ought to be 100% regardless of the recipients' income, or it really doesn't matter at all (to the degree it barely matters anyway).

[Axis Kast]

Maybe they should have thought about that before accepting the bailouts.

Why?

I don't particularly myself feel that taxing those bonuses was anything more than a public relations move. I doubt it heralds any kind of Congressional foray into AIG's operations.

But Gleckman makes a good general point, in case I'm wrong. Congress isn't beholden to shareholders, or to a bottom line. It's partisan and it's slow-acting. That isn't good for any company.

[Knife]

Congress and thus We the People ARE shareholders now.

[General Zod]

Maybe they should have thought about that before accepting the bailouts.

Why?

I don't particularly myself feel that taxing those bonuses was anything more than a public relations move. I doubt it heralds any kind of Congressional foray into AIG's operations.

But Gleckman makes a good general point, in case I'm wrong. Congress isn't beholden to shareholders, or to a bottom line. It's partisan and it's slow-acting. That isn't good for any company.

Unless I'm mistaken, by purchasing so many troubled assets off AIG with taxpayer money, Congress becomes a defacto shareholder. That means they have the right to determine AIG policy to a degree, including bonuses.

[Terralthra]

Maybe they should have thought about that before accepting the bailouts.

Why?

I don't particularly myself feel that taxing those bonuses was anything more than a public relations move. I doubt it heralds any kind of Congressional foray into AIG's operations.

But Gleckman makes a good general point, in case I'm wrong. Congress isn't beholden to shareholders, or to a bottom line. It's partisan and it's slow-acting. That isn't good for any company.

Congress isn't beholden to shareholders? I was pretty sure I got to vote for my congressional representative(s) last November...

[aerius]

But Gleckman makes a good general point, in case I'm wrong. Congress isn't beholden to shareholders, or to a bottom line. It's partisan and it's slow-acting. That isn't good for any company.

Gleckman is a fucking idiot and so are you, in that you both think Congress runs & micro-manages the company. The government via Treasury is the majority shareholder of AIG, as such they can do whatever the fuck they feel like, and as the majority shareholder (79.9% of all shares) they have an interest in preserving the value of their investment. Furthermore, any decisions on company operations are carried out by a small group of advisors or liasons in Treasury in consultation with AIG representatives, the 535 clowns in DC have no part in it beyond dishing out the bailouts as needed. Congress doesn't run the day to day operations of the company, and anyone who thinks it does, can, or will as Gleckman implies is a fucking idiot.

[Ender]

The real question about taxing these bonuses is whether or not they constitute ex post facto laws and or bill of attainder, both of which are banned by the Constitution. I would love to see these fuckers get what is coming to them, but if we can't get them that way we need to find another.

[General Zod]

The real question about taxing these bonuses is whether or not they constitute ex post facto laws and or bill of attainder, both of which are banned by the Constitution. I would love to see these fuckers get what is coming to them, but if we can't get them that way we need to find another.

If a measure can be justified as regulatory rather than punitive, then it doesn't necessarily violate the ex post facto ban. I figure that's what they did with this but it's hard to say without reading the text of exactly what they did.

[Knife]

The real question about taxing these bonuses is whether or not they constitute ex post facto laws and or bill of attainder, both of which are banned by the Constitution. I would love to see these fuckers get what is coming to them, but if we can't get them that way we need to find another.

If a measure can be justified as regulatory rather than punitive, then it doesn't necessarily violate the ex post facto ban. I figure that's what they did with this but it's hard to say without reading the text of exactly what they did.

Indeed, but you have half of the talking heads saying it is, and the other half saying they don't know. So even if they pass this it will probably end up in a court, but even then that should tie up the money until other tax courts can smack the robber barons with a fuckstick.

[CmdrWilkens]

Here is quite possibly the best analysis of the AIG "bonus" system that I have yet seen and it sheds a HUGE amount of light into a whole host of issues that should be addressed. Anyway mrer comments at the end but for now:

Live from 538.com

The company's 2007 10-K filing (annual report), released on 2/28/08, is the key to unraveling the mystery:

During the fourth quarter of 2007, certain of AIGFP’s available for sale investments in super senior and AAA-rated bonds issued by multi-sector CDOs experienced severe declines in their fair value. As a result, AIGFP recorded an other-than-temporary impairment charge in other income of $643 million. Notwithstanding AIG’s intent and ability to hold such securities until they recover in value, and despite structures which indicate that a substantial amount of the securities should continue to perform in accordance with their original terms, AIG concluded that it could not reasonably assert that the recovery period would be temporary.[...]

The change in fair value of AIGFP’s credit default swaps that reference CDOs and the decline in fair value of its investments in CDOs were caused by the significant widening in spreads in the fourth quarter on asset-backed securities, principally those related to U.S. residential mortgages, the severe liquidity crisis affecting the structured finance markets and the effects of rating agency downgrades on those securities. AIG continues to believe that these unrealized market valuation losses are not indicative of the losses AIGFP may realize over time on this portfolio. Based upon its most current analyses, AIG believes that any credit impairment losses realized over time by AIGFP will not be material to AIG’s consolidated financial condition, although it is possible that such realized losses could be material to AIG’s consolidated results of operations for an individual reporting period.[...]

The most significant component of Capital Markets operating expenses is compensation, which was approximately $423 million, $544 million and $481 million in 2007, 2006 and 2005, respectively. [...] In light of the unrealized market valuation loss related to the AIGFP super senior credit default swap portfolio, to retain and motivate the affected AIGFP employees, a special incentive plan relating to 2007 was established. Under this plan, certain AIGFP employees were granted cash awards vesting over two years and payable in 2013. The expense related to these awards will be recognized ratably over the vesting period, beginning in 2008.

Emphasis added. In conjunction with the disclosure of the terms of the "bonus" contracts (I'll explain in a moment why I'm using the scare quotes), we can piece together a pretty good idea about what happened.

The employees in AIG's Financial Products division (AIGFP) were compensated heavily -- perhaps almost exclusively -- via incentive-based compensation. That is, the employees got a profit share -- a rather generous 30 percent share -- of the earnings their division made by trading credit default options (CDOs) and related assets.

In the fourth quarter of 2007, the market for CDOs went completely to hell, an early casualty of the mortgage crisis. AIG, to that point, had already accumulated about $643 million in bad assets on its books. (Note AIG's use of the euphemism "other-than-temporary" to describe the writing off of these assets; that's a bit like calling Louie Anderson "other-than-skinny"). AIG must have anticipated that it was going to spend most of 2008, and perhaps most of 2009, merely climbing out of its hole rather than turning any sort of profit.

This must have posed something of a problem for the employees in the Financial Products division, since their compensation relied on these trades being profitable. So AIG struck a deal with these employees. It guaranteed them, for 2008 and 2009, the same level of incentive-based compensation that they received in 2007 (except for senior executives, who took a 25 percent haircut), regardless of how the division actually performed. The only requirements were that the employees couldn't quit and couldn't be fired for cause (a much stricter standard than the usual conditions of at-will employment.)

This turned out to be an other-than-good deal for AIG. But at the time, AIG must have believed that its hand was forced. At that point in early 2008, the market for the sorts of assets that AIGFP dealt in had crashed, but the broader asset markets hadn't yet. Many of these employees were highly skilled, and could plausibly find employment at another company that traded in other, relatively healthier types of commodities. But AIG evidently felt it needed them in order to minimize its losses and unwind its positions.

The thing about these "bonuses", however is that they're not really bonuses, which we usually think of as incentive-based compensation. On the contrary, they are something the opposite of bonuses: they took compensation that had been incentive-based and guaranteed it. It's precisely because that compensation was guaranteed -- not incentive-based -- that it is difficult to undo.

The fundamental issue here what I call asymmetrical agency bias. We as human beings tend to attribute our results to skill when we are performing well, but (bad) luck when we are performing poorly. Thus, AIG was willing to pay its Financial Products employees plenty when their trades were going well (assigning them agency for their profits), but was willing to make plenty of excuses for them ("the severe liquidity crisis", "the effects of rating agency downgrades") once things began to unravel. The employees, likewise, may have felt entitled to some large fraction of the incomes that they had "earned" before, and probably didn't regard themselves as culpable for the losses their trades had begun to take.

As someone who is alert to asymmetrical agency bias -- it is an extremely common phenomenon in both poker and baseball, two fields with which I am intimately acquainted -- I tend to be unusually sympathetic to the position that the individual traders at AIG were not especially responsible for the fact that their deals had begun to lose money. Even the most skilled and honest trader probably could not have done better than to limit his losses once the CDO market began to collapse in 2007. By the same token, however, I tend to be unusually unsympathetic in my assessment of how much alpha these traders were responsible for on the upside; any idiot could have made money trading credit default swaps in 2005 or 2006.

For this reason, I'm just not all that excited about confiscating the "bonuses" paid to the AIGFP employees. Rather, I'm interested in compensation and incentivization structures in general. Aggregate compensation throughout the financial services industry, I would guess, is much higher than is economically optimal (there is a lot of evidence that this is true of CEO pay). A lot of people are getting paid for what is thought to be skill but is really just luck (or economic rent).

If, as at most hedge funds, the employees are buying in with their own capital and bearing a lot of the downside risk, that is one thing. At a publicly-traded company, however, those employees are taking profits out of the shareholders' hands. And at a publicly-traded company that happens to be owned by the taxpayers, they're taking money out of the taxpayers' hands.

The compensation paid to AIG's employees, however, is less a moral failure than a market failure. We don't like to admit to market failures because they indict our collective judgment; instead we scapegoat and move on. But there are some ways to address these market failures; the more time we spend focusing on those, and the less on AIG, the more money we the taxpayers will save ourselves in the end.

I think the analysis is astute in that it points to the "bonuses" being garunteed compensation that happened to match prior year incentive compensation (most would consider this contractul work or possibly salary work but hey definitions). Now I don't know what person at AIG decided to simply garuntee the incentive payment rather than offer a new employment position with salaried compensation equal to the incentive level payment and move employees laterally (could be payroll tax reasons I'm not sure) but that is what opened this can of worms...somebody decided to make "incentives" into essentially salaries and along the way disconected the value of the incentive from any actual work performed.

The further indictment, that the market in the financial services sector amongst others is skewed towards excessively rewarding and minimizing failure, is probably right on. The thing is that much as the individual traders who will receive this compensation are likely overpaid to begin with targeting just these individuals does not address the fact that overpayment is systematic to the industry. It creates an extreme bias and does nothign to address the larger issue which, as above, is how compensaiton is structured throughout the industry.

Lastly if in fact the employees were written in to these contracts in 2007 or early 2008 before the TARP and other bailouts then any attempt to recover them does strike of an attempt on the part of the goverment (since it is now the majority shareholder) to breach that contract. I don't think the current law will get shot down in terms of being ex post facto, nor do I think it will endanger the bailout but non of the actions being taken even remotely attempt to fix the larger problem of overly large conglomerates distroting the market, both for assets and labor, and disconnecting compensation from performance. I'd be much happier if we were right now talking about breaking financial service comapnies back into their component parts through some combination of repeal Grahm-Leach-Bailey and upgrading the Sherman Anti-Trust.

But yeah my righteous anger at AIG is now gone.

[Col. Crackpot]

what pisses me off the most is that the very people who entered the language into the legislation allowing these bonuses are the one's screaming the loudest about it. Fucking whores. If there was any justice in this world Dubya, Chris Dodd and Barney Frank would be forced to share a jail cell for the next 50 years.

[Patrick Degan]

what pisses me off the most is that the very people who entered the language into the legislation allowing these bonuses are the one's screaming the loudest about it. Fucking whores. If there was any justice in this world Dubya, Chris Dodd and Barney Frank would be forced to share a jail cell for the next 50 years.

Dodd's not guilty. Cited in the other AIG thread.

[Darth Wong]

But yeah my righteous anger at AIG is now gone.

Why? They paid ridiculous compensation to people who were contributing nothing to society, and doing nothing particularly demanding or difficult. These people were drawing incomes far in excess of far more productive members of society and it was massively undeserved even in boom times. Then they made things even worse by promising to continue paying them these exorbitant rates even when they were losing their shirts. How does this make it less outrageous than "they're paying bonuses to spoiled fat cats?"

[Knife]

But yeah my righteous anger at AIG is now gone.

Why? They paid ridiculous compensation to people who were contributing nothing to society, and doing nothing particularly demanding or difficult. These people were drawing incomes far in excess of far more productive members of society and it was massively undeserved even in boom times. Then they made things even worse by promising to continue paying them these exorbitant rates even when they were losing their shirts. How does this make it less outrageous than "they're paying bonuses to spoiled fat cats?"

Indeed. These people got PAID because they knew the system, now they are getting FUCKING PAID because they know the system and they protected themselves because they knew the system and only they KNEW the system.

They are fucking parasites and fucking pirates, with an inflate sense of worth they've sold to the American population as being worth something. They fucking bet on things and want money no matter how the odds go. Fuck em.

[CmdrWilkens]

But yeah my righteous anger at AIG is now gone.

Why? They paid ridiculous compensation to people who were contributing nothing to society, and doing nothing particularly demanding or difficult. These people were drawing incomes far in excess of far more productive members of society and it was massively undeserved even in boom times. Then they made things even worse by promising to continue paying them these exorbitant rates even when they were losing their shirts. How does this make it less outrageous than "they're paying bonuses to spoiled fat cats?"

It doesn't stop my anger at the, and others have used this, "Masters of the Universe" syndromn that infects virtually everything to do with Wall Street. I fully concur, and think I mentioned concuring, with teh analysis that the value of work in the financial sector is overcompensated and probably economically harmful....but I'm not going to single AIG out for it. In this paticular case they paid folks exorbitant amounts of money...because a competitor would have done the same. These folks whatever their talents may or may not have been were going to be making this much money regardless. 2007, as the article notes, was when things got bad but before they got ugly so the market for "high performing traders" was still rich with cash rewards. Blaming AIG for paying it is sorta like blaming one team in the NHL for the huge cost of player salaries before the lockout years. I could try and single out an orgnaization but it just doesn't make sense. I'm angry at the whole system, and that includes AIG, but I can't maintain righteous anger against them because it makes it as if they are somehow paticularly to blame.

[Knife]

Sorry, that bullshit about hating the game not the player is just that, bullshit. I can both hate the game and the players doing it.

[Col. Crackpot]

what pisses me off the most is that the very people who entered the language into the legislation allowing these bonuses are the one's screaming the loudest about it. Fucking whores. If there was any justice in this world Dubya, Chris Dodd and Barney Frank would be forced to share a jail cell for the next 50 years.

Dodd's not guilty. Cited in the other AIG thread.

If you believe that i have some real estate in Florida i can sell you. Listen to this whore tap dance, and Wolf Blitzer call him out. This man took $100,000 in donations from AIG, made sure his buddies got paid, and then lied about it on video. Quid Pro Quo. JAIL HIM

http://www.youtube.com/watch?v=yKORaIfThqI

[CmdrWilkens]

Sorry, that bullshit about hating the game not the player is just that, bullshit. I can both hate the game and the players doing it.

You certainly can but I don't.

[SirNitram]

The real question about taxing these bonuses is whether or not they constitute ex post facto laws and or bill of attainder, both of which are banned by the Constitution. I would love to see these fuckers get what is coming to them, but if we can't get them that way we need to find another.

Hard to believe that.

Bill Of Attainder: –noun
an act of legislature finding a person guilty of treason or felony without trial.

So that's a pack of shit.

Since early-mid 19th century, Ex-Post Facto is only for criminal laws.

So basically, the talking heads are lying. As anyone can see, simply by mentioning Bill Of Attainder, they are making their bias clear.

[CmdrWilkens]

The real question about taxing these bonuses is whether or not they constitute ex post facto laws and or bill of attainder, both of which are banned by the Constitution. I would love to see these fuckers get what is coming to them, but if we can't get them that way we need to find another.

Hard to believe that.

Bill Of Attainder: –noun
an act of legislature finding a person guilty of treason or felony without trial.

So that's a pack of shit.

Ummm...no:

Not really

"These clauses of the Constitution are not of the broad, general nature of the Due Process Clause, but refer to rather precise legal terms which had a meaning under English law at the time the Constitution was adopted. A bill of attainder was a legislative act that singled out one or more persons and imposed punishment on them, without benefit of trial. Such actions were regarded as odious by the framers of the Constitution because it was the traditional role of a court, judging an individual case, to impose punishment." William H. Rehnquist"

So yeah when the chief justice of the United States tells you that a bil of atainder is considered any bill which singles out an individual or group for punishment then I'm going with that definition. For a little more history FindLaw is very informative:

''Bills of attainder . . . are such special acts of the legislature, as inflict capital punishments upon persons supposed to be guilty of high offences, such as treason and felony, without any conviction in the ordinary course of judicial proceedings. If an act inflicts a milder degree of punishment than death, it is called a bill of pains and penalties. . . . In such cases, the legislature assumes judicial magistracy, pronouncing upon the guilt of the party without any of the common forms and guards of trial, and satisfying itself with proofs, when such proofs are within its reach, whether they are conformable to the rules of evidence, or not. In short, in all such cases, the legislature exercises the highest power of sovereignty, and what may be properly deemed an irresponsible despotic discretion, being governed solely by what it deems political necessity or expediency, and too often under the influence of unreasonable fears, or unfounded suspicions.'' 1701 The phrase ''bill of attainder,'' as used in this clause and in clause 1 of Sec. 10, applies to bills of pains and penalties as well as to the traditional bills of attainder. 1702 "

So yes while "Bill of Attainder" in the strictest sense does not apply the broader interpertation of US law menas that any act which seeks to impose judicial type punishment upon a group by fiat of legislation is a bill of attainder (even if it technically if a bill of pains and penalties). Within the menaing of that phrase this legislation has to be much broader (and is, in that it addresses incentive compensation at any firm receiving atleast $5bn in bailout money) than simply attacking AIG's specific case.

[Count Chocula]

Here's a question I have, that's not been discussed in any of the network/news hooraw over the AIG retention bonuses: are the guys and gals getting the payouts the ones who caused the mess, or the "good" traders trying to make sense of and unwind AIG's commitments with minimal damage? If it's the first, it still seems arbitrary and - dare I say it - Clintonesque? - to have a retroactive tax applied to an exceedingly small group of betes noires. If singling out these AIG employees for punitive taxes gets traction, what are the odds it'll be done again to another group if the economy worsens? I realize I'm posing a "what-if" slippery slope, but it's something I've considered as a knock-on effect.

More significantly in my mind, if these AIG employees are NOT the ones who made the mess, but are attempting to mitigate the damage, what is the point of confiscating their bonuses? IF, and I say if because I don't know, these employees are the good guys, why would they have ANY INCENTIVE AT ALL to stay on staff and clean up someone else's mess, knowing that at the end of the day, their entire department will be folded and they'll be out of jobs? Screwing over the people trying to make sense of the trades that blew up AIG and relatively painlessly unwind them seems like a baaaadddd move.

[General Zod]

Here's a question I have, that's not been discussed in any of the network/news hooraw over the AIG retention bonuses: are the guys and gals getting the payouts the ones who caused the mess, or the "good" traders trying to make sense of and unwind AIG's commitments with minimal damage? If it's the first, it still seems arbitrary and - dare I say it - Clintonesque? - to have a retroactive tax applied to an exceedingly small group of betes noires. If singling out these AIG employees for punitive taxes gets traction, what are the odds it'll be done again to another group if the economy worsens? I realize I'm posing a "what-if" slippery slope, but it's something I've considered as a knock-on effect.

Without seeing the exact language of how these bonuses are being taxed calling it "punitive" is rather a leap. As far as who got the bonuses there aren't any public lists available. Considering AIG employees have been getting death threats I don't expect to see any public list anytime soon.

More significantly in my mind, if these AIG employees are NOT the ones who made the mess, but are attempting to mitigate the damage, what is the point of confiscating their bonuses? IF, and I say if because I don't know, these employees are the good guys, why would they have ANY INCENTIVE AT ALL to stay on staff and clean up someone else's mess, knowing that at the end of the day, their entire department will be folded and they'll be out of jobs? Screwing over the people trying to make sense of the trades that blew up AIG and relatively painlessly unwind them seems like a baaaadddd move.

Unless the executives are brand spanking new and hired before the company was given bailout money then I really don't see that it matters. The buck stops with the leadership and quite frankly they should be setting an example rather than demanding incentive to fix up their company's own mess.

[Count Chocula]

Unless the executives are brand spanking new and hired before the company was given bailout money then I really don't see that it matters. The buck stops with the leadership and quite frankly they should be setting an example rather than demanding incentive to fix up their company's own mess.

Ah. I was thinking more of the people doing the actual analysis and trades, rather than the "corner office" boys who either knew about the mess or let it happen. Now, unfortunately, I'm even more confused about the equity of taxing the bonuses, and even more doubtful (in light of your observation of death threats) that we'll really find out who got the payouts. Damn what a mess.

In other news, and partial confirmation my "knock-on effect" suspicions, it looks like Fannie and Freddie's bonuses are in the sights, albeit for only $600,000 not hundreds of millions of dollars like AIG.