House passes 90% tax on bonuses from bailed-out firms

From here:

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Spurred by anger over A.I.G. bonuses, the House voted 328 to 93 to levy a 90 percent tax on any company accepting
more than $5 billion in bailout money.

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Well, while I read that this was a possibility this morning, if you had asked me two weeks ago if something like this would ever happen I would have laughed. In your face. I'm preemptively ashamed of my presumed behavior.

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In one sign of the issue’s political potency, 85 Republicans joined 243 Democrats in voting for the measure rather than for a rival proposal put forth by the Republican leadership. Only 6 Democrats voted against the bill, along with 87 Republicans.

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But is this a good idea? Are we paying Peter to rob... Peter? Do we giveth with one hand and taketh away with the other? Do we care?

If you're anti-tax, is this two wrongs making a right or two wrongs making a wrong?

Thoughts?

I love it!

This made me smile. It is brilliant and simple. I figured the other thing to do was announce the IRS would be deep auditing everybody that got a bonus from the bailout companies.

I'm leery of using tax codes to go after people this way. Slippery slope and all that. No action should be taken until everybody has had a chance to calm down and think rationally.





Then we hang the blackguards from the lampposts as an object lesson to others!

The moral logic behind this is pretty strong, but it would have been better if the Congress had thought of how the package might be spent before they passed it. However, it's stuff like this that makes the tax code so complex, partly because the tax lawyers are now going to spend time working out how to evade this tax.

I'm with silenus on this. I'm hesitant of any move that adds complexity to any tax code (not that this seems overly complex). It's fairly safe to say that it's going to be a popular move, I think. While bonus payouts have often been perfectly in line with company policies, they are truly shit from a PR perspective as the situation stands today.

[aside]It's my feeling that the whole bonus system needs a thorough remodeling. As it stands today, bonuses are paid out for achieving short term goals, which is exactly what got us in this mess in the first place.

The same can be said about boards of directors and presidents being so deeply interconnected.[/aside]

I just- I don't know.

From one perspective, it tickles me more than a bed full of feathers. The company is effectively bankrupt. We're keeping the business afloat because they're tethered to the world economy--if they sink, they're not going down alone. But that should never have been an excuse to reward their employees with compensation that wasn't earned. In that sense, whatever action that's taken to reclaim this money from the scumbags who dishonestly gave it out is a measure worth taking.

On the other hand, is this shit even constitutional? And even if it's legal, is it really a good idea? I mean, seriously. What kind of precedent does this set if we're going to arbitrarily raise the taxes on the people we dislike most? Doesn't that set a bad example for the future, even if this particular tax is completely justified, given the fact that this was taxpayer money to begin with? I just don't know.

Since when can we pass retroactive laws?

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Originally posted by Cluricaun

Since when can we pass retroactive laws?

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Well, it's not the retroactive part that's the problem, per se. Retroactive criminal statues are clearly unconstitutional, but there's no such provision for taxation. Clinton passed a retroactive tax, and it passed muster.

But combine that retroactive tax with a specific target of punishment, and then the process seems much murkier to me, as if the government can choose to punish whoever it wants, whenever it wants, in an completely arbitrary manner. Speak out against the wrong topic? Well, we'll just tax your income last year at 90% and see how you like it. I don't have a problem with these particular execs losing their pay. But damn, it just seems like a bad example to set.

The precedent is terrifying. Tax isn't supposed to be a punishment, period.

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Originally posted by Cluricaun

Since when can we pass retroactive laws?

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Since next week.

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Originally posted by Cluricaun

The precedent is terrifying. Tax isn't supposed to be a punishment, period.

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Yeah, something about this makes me uneasy, even though I can appreciate the feeling of wanting to get some revenge. If the bailout money wasn't supposed to be spent in certain ways, then that should have been a condition for getting the money. If it was just cash handed over for the businesses to do as they please, then maybe that was congress's fault in the first place.

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Originally posted by Sarahfeena

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Originally posted by Cluricaun

The precedent is terrifying. Tax isn't supposed to be a punishment, period.

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Yeah, something about this makes me uneasy, even though I can appreciate the feeling of wanting to get some revenge. If the bailout money wasn't supposed to be spent in certain ways, then that should have been a condition for getting the money. If it was just cash handed over for the businesses to do as they please, then maybe that was congress's fault in the first place.

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Maybe. But Congress was trying to act quickly to get the bailouts passed to prevent financial panic, which was good. And they didn't directly implement the funds transfers. That was up to the Treasury.

In fact, Bush's Treasury specifically knew about, and okayed, the idea of extra compensation for certain employees. And Obama's Treasury either allowed it to continue, or was completely oblivious to what was going on, and neither option is a particularly good sign. I've heard lots of reports that Geithner is a smart guy, but there's nothing so far that indicates that he's actually a competent Treasury Secretary.

If he'd pushed for a government controlled bankruptcy/receivership, then all those contracts would've been voided anyway through a (somwhat) standard legal procedure. That's what bankruptcy is supposed to be. Just because the normal legal procedure would've crashed the world financial markets doesn't mean that they couldn't've drafted a special bankruptcy case for AIG that would've wiped out the people who were responsible, while at the same time preserving AIG's international obligations, and thus the stability of world markets. I personally think Obama gets 3 out of every 4 things right, a vast improvement from the previous administration, but his Treasury is simply not doing its job.

These tax shenanigans could have been avoided entirely if they'd stepped up with proper action more quickly. In their defense, it's only been two months on the job, but two months during a crisis is damn near forever.

I'm going to add my vote to silenus' post. The arrogance and chutzpah of the people involved with this are stunning and karmic retribution really sounds appealing.


But using the tax code like this as an out and out confiscatory measure because the public is mad at a small group of people really, really, really scares me. It really feels like tyranny of the majority. With some monster teeth.

OTOH, it's worth noting that a lot of the tax code is already set up to reward or punish behaviors. This isn't unprecedented in the general terms, it's the specifics of who is targeted and for how much that seems to be going beyond the pale.

Even if it's unconstitutional, which it may be, I'm for it. (As OtakuLoki points out, though, the tax codes are already intended to punish and reward behavior, and as Hellestal points out this isn't a retroactive law, it's an addition to the tax code for the current year. You always take a chance , when you do something, that laws may be passed that could affect your taxes. That's why some investments and decisions are considered "safe" and some considered "risky." Obviously this was a risky decision, to opt for bonuses in that all the dust hadn't settled, and the Congress was still tweaking the laws that applied to it.) But what I like about it is that even the threat that the SC may rule it perfectly consititutional gives the AIG thieves a real incentive to agree to surrender a large part of the bonus money in return for the tax law being dropped. It's leverage.

To build on prr's point - just because the House has passed this doesn't mean that the Senate will, nor that it will be signed into law.

As leverage, I really have no complaint about it. I'd rather it not get passed into law, but the threat of it doesn't bother me nearly as much as the actuality would.

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Originally posted by OtakuLoki

OTOH, it's worth noting that a lot of the tax code is already set up to reward or punish behaviors.

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Certainly, however the tax code is pretty clear on how you'll be punished or rewarded. Don't accept gift funds or you'll pay a hefty penalty. Donate lots of stuff to Goodwill, and you'll be rewarded.

Accepting your contractually guaranteed bonus from work isn't risky behavior. I'll grant you that many of those people didn't deserve them, but to retroactively punish them for your own short sightedness is insane. And what of the people who got smaller bonuses? A few thousand dollars sucked right out of the hands of people who don't look or act anything like Gordon Gecko. People like you and me.

It looks like AIG isn't the only group that doesn't know how to run AIG.

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Originally posted by Cluricaun

The precedent is terrifying. Tax isn't supposed to be a punishment, period.

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Guess you've forgotten that old Supreme Court case that found that states could not levy taxes against the federal government (in this case, I think, it was property taxes). The justification for this ruling was: "The power to tax is the power to destroy." Taxation has always come equipped with jackboots. It's just that we usually don't notice.

I find the present case a bit disturbing, but have decided that, if I were a congresscritter, this would be one of the times when I would silence my qualms by "voting the will of my constituents". Better this than letting the serfs get so riled that they start pitchforking millionaires to the side of the barn.

The long-term solution, of course, is to get off of this "business is sacrosanct" kick and treat economic behavior the same way we treat social behavior: under the penal code.

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Originally posted by BJMoose

Better this than letting the serfs get so riled that they start pitchforking millionaires to the side of the barn.

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This is true. Look at the number of revolutions that have started this way. All it would take is one more clueless executive or company to do something outrageous, and somewhere a mob will snap. Then things will get nasty.

Inspector Kemp: A riot is an ungly thing... undt, I tink, that it is chust about time ve had vun!

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Originally posted by BJMoose

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Originally posted by Cluricaun

Better this than letting the serfs get so riled that they start pitchforking millionaires to the side of the barn.

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Guess I can see if Menards takes returns on pitchforks. :(

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Originally posted by Hellestal

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Originally posted by Sarahfeena

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Originally posted by Cluricaun

The precedent is terrifying. Tax isn't supposed to be a punishment, period.

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Yeah, something about this makes me uneasy, even though I can appreciate the feeling of wanting to get some revenge. If the bailout money wasn't supposed to be spent in certain ways, then that should have been a condition for getting the money. If it was just cash handed over for the businesses to do as they please, then maybe that was congress's fault in the first place.

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Maybe. But Congress was trying to act quickly to get the bailouts passed to prevent financial panic, which was good. And they didn't directly implement the funds transfers. That was up to the Treasury.

In fact, Bush's Treasury specifically knew about, and okayed, the idea of extra compensation for certain employees. And Obama's Treasury either allowed it to continue, or was completely oblivious to what was going on, and neither option is a particularly good sign. I've heard lots of reports that Geithner is a smart guy, but there's nothing so far that indicates that he's actually a competent Treasury Secretary.

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My husband said that he heard the Treasury dept. DID know of it, and okayed it. He was in Europe for the last couple of weeks, though, so I'm not sure if he got that info from CNN or some local news source there.

Either way, it seems it was a matter of not considering the conseqences of all of this before rushing ahead, and trying to backpedal it to make everyone happy.

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Originally posted by Sarahfeena

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Originally posted by Cluricaun

The precedent is terrifying. Tax isn't supposed to be a punishment, period.

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Yeah, something about this makes me uneasy, even though I can appreciate the feeling of wanting to get some revenge. If the bailout money wasn't supposed to be spent in certain ways, then that should have been a condition for getting the money. If it was just cash handed over for the businesses to do as they please, then maybe that was congress's fault in the first place.

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Yes, that's the part that makes me unsettled. Actually, I don't really have a problem, morally, with Congress telling them how they can use their money expropriated from the taxpayers, but the fact is that they shouldn't have gotten it in the first place. It intertwines the government way too much in the affairs of private business.

The main problem is that if you're going to run a company with government money, it needs to be run by the government to insure proper, non-personal-profit based operation, but Congress has no clue how to run these companies (kind of the reason we've decided not to be a socialist state, but I digress), so they have to use the same guys. Which is why they should have just been forced to go into Chapter 11 bankruptcy and forced to restructure or collapse totally. Sure, it might hurt a little more in the short term, but it would clean out the marginal companies instead of keeping "zombie" companies (talk about Voodoo economics! ;) ) running until they need their next infusion of taxpayer money.

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Originally posted by BJMoose

The long-term solution, of course, is to get off of this "business is sacrosanct" kick and treat economic behavior the same way we treat social behavior: under the penal code.

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What does this even mean? We use the penal code (or justly use it anyway) in situations where one person uses force against another to violate his rights. Exactly which economic actions would you like to criminalize?

I think it's wrong to frame this as punishment. It's a recovery of our money that should not have been used in the way that it was used.

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Originally posted by Hentor the Barbarian

I think it's wrong to frame this as punishment. It's a recovery of our money that should not have been used in the way that it was used.

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I like that. Good way to look at it.

I think that really, really thorough audits, with a fine-tooth comb, latex glove, and plenty of Vaseline, would be a better idea. I bet they would end up getting more money back from these thieves than with a 90% tax.

On second thought, forgo the Vaseline.

But then we're right back to the Nixon Era, where the Administration sicced the IRS on its "Enemies List." Just because your (my) guy is in power is no excuse to violate rule of law and proper procedure. If we do not act better than Those Other Guys, then we become Those Other Guys. No, all we can pray for, morally, is an outbreak of mob violence and some salutary lynchings. :D

Reading about this more, it's worse than I had initially realized: it's not just a 90% tax on huge bonuses to CEOs; it's a 90% tax on all bonuses that bring a family's total income up to over $250,000 a year. Great way to attract "the best and brightest" to work for these companies (or keep them there) if we want them to actually, you know, succeed. I do like the moniker, the "Populist Rage Tax", though. :P

Hard cases make bad law, as the saying goes.

Like silenus, I am a little bit surprised that AIG headquarters isn't a gutted, burnt-out hulk of a building at this time. They failed, isn't the system supposed to punish them? We reward them lavishly for running a major chunk of the the economy, and they dropped the ball. Now they expect bonuses? Screw that, tell them to get their hands out of my pockets. Better yet, tell them to go do the right thing and work for free until they've righted their wrongdoings. Or they can leave the company, I'm sure there's tons of openings in the financial sector, particularly for someone with AIG on his/her resume. But all of that is just emotional.

It's not good lawmaking. The law is supposed to be majestic and impartial. This is neither.

Vox, I'd be more concerned about that if I thought that the current system of bonuses and salaries were actually bringing in competent people: remember most of the people directly responsible for this mess were earning huge bonuses.

Frankly, when we're talking about companies in this kind of spectacular failure mode, being concerned about retaining their current management seems a bit silly.

I have to admit, however, I'm also doing a bit of a knee-jerk reaction to that argument since it parallels one used here in NY to argue against any kind of ethics reform for politicians: "We can't change things, if we do we won't be able to attract the same calibre of people to do the work!"

If the people doing the work now are fucking things up, why would we want to keep employing people of their calibre?

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Originally posted by Vox Imperatoris

Reading about this more, it's worse than I had initially realized: it's not just a 90% tax on huge bonuses to CEOs; it's a 90% tax on all bonuses that bring a family's total income up to over $250,000 a year. Great way to attract "the best and brightest" to work for these companies (or keep them there) if we want them to actually, you know, succeed. I do like the moniker, the "Populist Rage Tax", though. :P

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Meh. If the best and brightest worked for AIG, the company wouldn't be on the dole.

And if there is going to be vacant spots on the AIG company ladder (and the company has the potential to right itself), I'd say that ought to attract some smart people who can look beyond the immediate future. Attrition makes for fast promotion - "To bloody wars and sickly seasons" as the old British Navy toast went. Wouldn't it be worthwhile for an up-and-coming exec to try to become part of the team that set AIG right?

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Originally posted by OtakuLoki

If the people doing the work now are fucking things up, why would we want to keep employing people of their calibre?

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Well, if we plan on firing them out of a cannon, a common calibre is a good thing. :D

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Originally posted by silenus

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Originally posted by OtakuLoki

If the people doing the work now are fucking things up, why would we want to keep employing people of their calibre?

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Well, if we plan on firing them out of a cannon, a common calibre is a good thing. :D

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I'm sure we can make them fit.

But the thing is, it's penalizing people who were not involved in the screw-up in the first place. Let's face it, if you make $250,000 a year, you are not one of AIG's top executives. You may be in their local or regional management, but you probably weren't involved in any serious company policy decisions. You might even be a low-level worker married to a lawyer or doctor, in which case you still qualify to have your bonus taxed away. The government doesn't have the right to directly legislate your salary.

Vox, those are all much better arguments. ;)

It's not that I'm all that in favor of this particular legislation, as I've made clear in my prior posts. I just object to that one argument for leaving high salaries alone: That without this we can't keep current high quality people.




So - if we're going to be sticking them in a cannon and shooting them somewhere, who should get them? I'm assuming the cannon is in NYC, otherwise NYC would be the obvious place to return to sender.

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Originally posted by Vox Imperatoris

But the thing is, it's penalizing people who were not involved in the screw-up in the first place.

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Hard to say, in my opinion. Perhaps they were just being good company men, duly toeing the line and expecting that their seniors knew what they were doing. I consider it more likely they were completely aware that they were being asked to do something that would not end well, but they benefited from it as they went along. Be that as it may, if you accept a bonus as a major part of your pay, you're tying your income to the financial health of the company.

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The government doesn't have the right to directly legislate your salary.

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If your company needs a cash infusion from public coffers, the government can sure as hell set conditions. AIG could have turned down the offer, and we wouldn't be having this discussion - because the people whose tax rates we're discussing would be out looking for jobs. My beef is with tweaking things post-factum - bad practice.

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Originally posted by Spiny Norman

If your company needs a cash infusion from public coffers, the government can sure as hell set conditions. AIG could have turned down the offer, and we wouldn't be having this discussion - because the people whose tax rates we're discussing would be out looking for jobs. My beef is with tweaking things post-factum - bad practice.

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Which of course is why the government shouldn't have pretend-not-to-nationalized them in the first place. Sure, the government can set conditions if it basically owns the company, but there's a reason we try to have as few nationalized industries as possible in America—they're inefficient, poorly-run and often corrupt.

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Originally posted by Vox Imperatoris

Which of course is why the government shouldn't have pretend-not-to-nationalized them in the first place. Sure, the government can set conditions if it basically owns the company, but there's a reason we try to have as few nationalized industries as possible in America—they're inefficient, poorly-run and often corrupt.

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Compared to what?

Here in reality, we're not dealing with an over-simplistic choice between an efficient private sector and a bunch of doddering government bureaucrats. The private financial markets are not efficient. We experienced a massive market failure that's led to worldwide recession, and to set things set requires that the government to take a more active role in regulating, and for the time being even managing, these companies. It's not an ideal situation, but it's better than the alternatives. Taking these companies into receivership, which is to say temporary nationalization, could not possibly lead to more inefficient, poorly-run, or corrupt companies than what we previously had under private ownership.

The idea here isn't revolution. It's to take an established concept and apply it on a larger scale. The FDIC "nationalizes" banks all the time. These banks get taken over, cleaned up, then released back out into the wild. This is a completely standard process. We're dealing with a more difficult task for a big multinational financial conglomerate, but the principle is exactly the same. So, in essence, I agree with at least one thing you said. The government shouldn't have pretended not to nationalize them. We should have nationalized them straight-up, no question, and then immediately gotten to work on the problem of fixing them.

Had we done that, then this bonus situation would be a no-brainer. The contracts would already have been nullified as a part of a non-standard bankruptcy procedure. But instead the Obama Treasury is acting like these institutions, which have already demonstrated their incompetence beyond any doubt, can be trusted to set things right themselves if only they receive enough of our money to do it.

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Originally posted by Hellestal

We experienced a massive market failure that's led to worldwide recession, and to set things set requires that the government to take a more active role in regulating, and for the time being even managing, these companies.

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I must've revised that sentence three times, and I still didn't get it right. The meaning's probably clear, but just in case:

Ahem.

We experienced a massive market failure that's led to worldwide recession, and to set things right requires that the government take a more active role in regulating, and for the time being even managing, these companies.

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Originally posted by Vox Imperatoris

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Originally posted by BJMoose

The long-term solution, of course, is to get off of this "business is sacrosanct" kick and treat economic behavior the same way we treat social behavior: under the penal code.

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What does this even mean? We use the penal code (or justly use it anyway) in situations where one person uses force against another to violate his rights. Exactly which economic actions would you like to criminalize?

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I haven't the time now for a philosophical discourse, so I'll just go for the jugular.

As I recall, you're a young pup. You've never been layed off. You've never spent months trying to find a job -- any job. You've never been in the position of wondering how in hell you're going to pay next month's bills.

The exec who enriches himself by, say, shutting down his domestic factory and shipping all those jobs overseas, is screwing up thousands of lives in a way that is far, far worse than the mischief cause by some junkie breaking into your house in search of something to hock.

The purpose of conduct laws is to protect everyone from the selfish whims of others. Why the hell should business behavior be treated any different?

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Originally posted by Cluricaun

And what of the people who got smaller bonuses? A few thousand dollars sucked right out of the hands of people who don't look or act anything like Gordon Gecko. People like you and me.

It looks like AIG isn't the only group that doesn't know how to run AIG.

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You know what? If those people still have jobs, then my heart doesn't exactly bleed for them. I don't, as an only-very-slightly indirect result of the actions of those people's bosses.

I'm paying bonuses to the people who cost me my job. Fuck 'em. Fuck 'em hard, and sideways, with something sharp and rusty.

[quote=Vox Imperatoris]

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Originally posted by "Spiny Norman":cjj6l84w

If your company needs a cash infusion from public coffers, the government can sure as hell set conditions. AIG could have turned down the offer, and we wouldn't be having this discussion - because the people whose tax rates we're discussing would be out looking for jobs. My beef is with tweaking things post-factum - bad practice.

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Which of course is why the government shouldn't have pretend-not-to-nationalized them in the first place. [/quote:cjj6l84w]

Meh. The consequences of letting them flounder completely would've been worse, overall. We don't have the luxury of insisting on ideologically clean solutions.

That doesn't mean the company is owed kid glove treatment. Pretty much by definition, you're not entitled to a bonus. It's conditional on the company doing well. And AIG is not doing well.

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Sure, the government can set conditions if it basically owns the company, but there's a reason we try to have as few nationalized industries as possible in America—they're inefficient, poorly-run and often corrupt.

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Compared to what? The US financial sector over the last few years?

Some opinion polling:

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Fifty-seven percent (57%) of U.S. voters favor imposing a 90% tax on bonuses paid by American International Group (AIG) and other firms that receive government bailout money, according to a new Rasmussen Reports national telephone survey.

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Sixty-seven percent (67%) of all voters now oppose any additional federal funding for AIG.

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I suspect this will be an unpopular opinion. I certainly sympathise with the outrage that people who are responsible for this whole mess might be getting bonuses out of it. And, I admit that I haven't done any research on how discriminating the new tax levy is with regards to who it applies to. It doesn't really matter, though, because a lot of my objection is related to the perception that it brings about, rather than the actual effects. And, truthfully, I suspect that my cynicism is for once, overblown.

However:

What should have happened is that AIG was allowed to go into bankruptcy, which would (as mentioned above) allowed the bonus contracts to be cancelled under long established laws. The court could then appoint the proper people to go in and do what's needed on a detailed, measured, orderly timetable. Certainly there would be more dire short-term economic fall-out, but it wouldn't have been as bad as an all-out cratering of the company, or of the death-by-a-thousand-cuts that's happening now. By retroactively changing the game, the government has chipped away a little at confidence in employment contracts. [Also as mentioned above,] it's a slippery slope. How are Wall Street companies that are struggling to get back on their feet going to hire the brightest and best to come and work for them, if there's no confidence that any performance contract is going to stand up? Bay Street and Fleet Street start to look a lot more attractive for those candidates. To use a little hyperbole, how is even the UAW going to be confident that any contract that they sign is going to be safe from clawbacks should the automakers slide into trouble once again? You can bet right now that they're going to be hunting for blood the moment that the domestic makers show a hint of black on the balance sheet.

With regard to wanting to tar and feather executives who, for example, off-shore jobs, you're going to have to make fundamental changes to the fiduciary duty regulations of public officers and make job retention laws with teeth real before that practice ceases. As long as an executive is charged with maximizing the shareholder value, and there's no corporate down-side for doing so, that's the route they're going to take. At the risk of using hyperbole once again, a shareholder could even conceivably sue a company that failed to take such opportunities.

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Originally posted by Cerowyn

I suspect this will be an unpopular opinion. I certainly sympathise with the outrage that people who are responsible for this whole mess might be getting bonuses out of it. And, I admit that I haven't done any research on how discriminating the new tax levy is with regards to who it applies to. It doesn't really matter, though, because a lot of my objection is related to the perception that it brings about, rather than the actual effects. And, truthfully, I suspect that my cynicism is for once, overblown.

However:

What should have happened is that AIG was allowed to go into bankruptcy, which would (as mentioned above) allowed the bonus contracts to be cancelled under long established laws. The court could then appoint the proper people to go in and do what's needed on a detailed, measured, orderly timetable. Certainly there would be more dire short-term economic fall-out, but it wouldn't have been as bad as an all-out cratering of the company, or of the death-by-a-thousand-cuts that's happening now. By retroactively changing the game, the government has chipped away a little at confidence in employment contracts. [Also as mentioned above,] it's a slippery slope. How are Wall Street companies that are struggling to get back on their feet going to hire the brightest and best to come and work for them, if there's no confidence that any performance contract is going to stand up? Bay Street and Fleet Street start to look a lot more attractive for those candidates. To use a little hyperbole, how is even the UAW going to be confident that any contract that they sign is going to be safe from clawbacks should the automakers slide into trouble once again? You can bet right now that they're going to be hunting for blood the moment that the domestic makers show a hint of black on the balance sheet.

With regard to wanting to tar and feather executives who, for example, off-shore jobs, you're going to have to make fundamental changes to the fiduciary duty regulations of public officers and make job retention laws with teeth real before that practice ceases. As long as an executive is charged with maximizing the shareholder value, and there's no corporate down-side for doing so, that's the route they're going to take. At the risk of using hyperbole once again, a shareholder could even conceivably sue a company that failed to take such opportunities.

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Interesting. My own modest, half-baked take on some of your comments:

I'm inclined to yell "buck-nekkid emperor!" at the notion that these Wall Street folks are somehow special, perhaps even irreplacable. Let's face it: most of the folks working for such firms are little more than highly-paid telemarketers. It takes a genius to call everyone on a client list and hawk the latest "hot pick" made by the boys in the back room? Hah. And I have some strong doubts that most of the folks making picks and deals and inventing new "investment instruments" are particularly special. Fortunate? Yes. Geniuses? Nah.

In fact, if, as you suggest, AIG and some others had been allowed to go boink, wouldn't the sudden glut of whiz kids in the job market shove average compensation downward? It does in the real world. Supply and demand and all that. . . .

Now, I certainly agree that contracts should be honored. But what has muddied the AIG thing is this: since the payments in question had been contractually guaranteed, they are in no way "bonuses", if that term is to have any meaning. What happened is, some months back, AIG guaranteed that in 2008 it would give its people at least as much in "bonuses" as it had in 2007. This is public record. What I do not know is: 1) were the 2007 baseline payments true bonuses? And if so, 2) why the hell was AIG obligating itself to pay 2008 "bonuses" at a time when it should have been (and probably was) obvious that the operation was circling the toilet bowl? It is this possibility that has the huddled masses reaching for their pitchforks.

I'm with you on your last paragraph. I think the ultimate source of nearly all of the problems in the business sector since, say, 1980 is that fact that the only ethic most CEOs seem to subscribe to these days is maximizing profits. If, in shutting down this plant, I throw thousands of people out of work and some of them eventually wind up living under a bridge somewhere, 'taint my problem. My only concern is beefing up the bottom line. [We'll leave for another day whether such a simplistic approach to business is good for the long-term health of corporations.] Hence my insistence on calling for -- quick, pop some digitalis! -- increased regulation of business. In all morality systems that are worth diddly, selfishness is considered a bad deal.

And it is.