As angry as I am about the bailouts and bonuses, I am more angry at the government and their roll in this farce than I am at the AIG executives. The executives at AIG did exactly what I would expect them to do did and what they have been doing for decades, i.e., bleed their shareholders and clients dry.
Our government should have known better and done better. Instead they true to form, they accepted donations from these corporations in return for backroom deals and lies. Now caught with hands in the cookie jar, the scoundrels embark on a witch hunt and muddy the waters even further while trying to still keep us in the dark.
The witch hunt will not right the wrongs or change a damn thing on either side of the fence. Both sides just want things to quiet down so that they can get back to business as usual.
We should all be concerned once Congress starts writing and passing laws that tax and penalize Americans and the “bad people” after the fact and the retroactively. It is illegal as well unconstitutional, and not to mention a much awaited opportunity for Obama who wants to re-write the laws in a nation that he has so little respect for anyway.
Should such precedent setting legislation be approved, what and who is next?
Not to mention, it will be the American people who in the long run will suffer the consequences because this legislation will backfire in our faces.
Banker Fury Over Tax ‘Witch-Hunt’
“Bankers on Wall Street and in Europe have struck back against moves by US lawmakers to slap punitive taxes on bonuses paid to high earners at bailed-out institutions.
Senior executives on both sides of the Atlantic on Friday warned of an exodus of talent from some of the biggest names in US finance, saying the ‘anti-American’ measures smacked of “a McCarthy witch-hunt” that would send the country ‘back to the stone age’.
There were fears that the backlash triggered by AIG’s payment of $165m in bonuses to executives responsible for losses that forced a $170bn taxpayer-funded rescue would have devastating consequences for the largest banks.
‘Finance is one of America’s great industries, and they’re destroying it,’ said one banker at a firm that has accepted public money. ‘This happened out of haste and anger over AIG, but we’re not like AIG.’
Pandit memo to Citi employees on bonus clawbacks
Lockhart letter to Frank on Fannie/Freddie bonuses
“The banker added: ‘It’s like a McCarthy witch-hunt…This is the most profoundly anti- American thing I’ve ever seen.’
Vikram Pandit, Citigroup’s chief executive, told employees in a memo that some anger about executive compensation was ‘warranted’. But he hit out against the idea of a special tax. ‘The work we have all done to try to stabilise the financial system and to get this economy moving again would be significantly set back if we lose our talented people because Congress imposes a special tax on financial services employees,’ he wrote.
Some policymakers expressed concern that banks may try to break out of the government’s embrace by paying back public capital even if the price is a more severe credit squeeze.
They also fear that financial institutions may decide not to take part in public-private partnerships to finance credit markets and acquire toxic assets.
The outcry followed Thursday’s approval by the House of Representatives of a bill that would impose 90 per cent tax on bonuses to employees whose gross income exceeded $250,000 at bailed-out firms.
Next week the Senate will also consider a hefty tax on bail-out bonuses amid calls for an investigation into who was responsible for allowing the pay-outs. Some senators are calling for a committee hearing on a bill that would impose a 70 per cent tax at bailed-out institutions, half paid by employees and half by companies, arguing that a delay would help cool political anger.
‘There are three big industries where the US has global leadership: financial services, media and technology. Introducing this 90 per cent tax is like taking one of those industries out the back and shooting it,’ said a top Wall Street executive.
In Frankfurt one employee at a US investment bank said the new tax measures would ‘send [the US] back to the stone age’.
‘Commodity traders are already moving to companies like BP where they can make as much money as they used to,’ said another banker at a US firm.
Bankers at Deutsche Bank said it could benefit from the proposed legislation by poaching its US rivals’ most talented employees. “
Under such legislation banks will tighten the reins even tighter, giving even less credit and granting fewer loans in an effort to hoard even more cash so that they can hurry up and pay the government back in order to get out from under Obama’s thumb. Thus, the American people will get the short end of this stick and it will hurt.
And what’s the rush anyway? For years, Congress and the Senate has dragged their butts on the passing of various legislation. All of a sudden everything is a rush.
Did we not learn a lesson from the expensive stimulus package? Actually, we are still learning. But when Congress and the Senate rushes, an abundance of errors are made and the American people pay the toll.
“Beware any financial legislation that passes the House of Representatives rapidly when both the Democrats and Republicans are angry. It will cause a heap of unintended consequences.
That was true of the Sarbanes-Oxley Act of 2002 and it may be even more true of the House’s bill to impose a 90 per cent tax on bonuses earned by employees of large banks that have taken US government capital. It is an ill-conceived and over-hasty piece of populism.
The mistake has been to broaden a bill prompted by employees of AIG Financial Products to the entire set of large Tarp recipients.”
Tax Wall Street Bankers In Haste, Repent At Leisure