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.”

Read it all.


Posted in * Culture-Watch, * Economics, Politics, Economy, House of Representatives, Law & Legal Issues, Office of the President, Politics in General, President Barack Obama, Senate, Stock Market, Taxes, The 2009 Obama Administration Bank Bailout Plan, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government, Treasury Secretary Timothy Geithner

16 comments on “Banker fury over tax ”˜witch-hunt’

  1. Sarah1 says:

    RE: “but we’re not like AIG.” . . . ”

    Well, you are in the one key way that matters. You took government bailout money.

    Big mistake.

    Big. Big. [i]Big mistake.[/i]

  2. robroy says:

    Let’s see. You ran your company into the ground. Is that what you considered [i]talented[/i]?

  3. DonGander says:

    I’ve spent some time with my banker and, like doctors that I know, I can’t believe the government garbage that they have to put up with. I know that they need to be regulated but I’m talking stuff that exceeds any decent definition of the term “regulated”.

    Whatever my banker earns – it is not enough.

    And, why would a “free” nation cap the earnings of any legal activity? Government either needs to outlaw a practice or allow people to excell in what they do.


  4. Jeffersonian says:

    I’m not sure that all these guys took Caesar’s coin.

  5. DonGander says:

    2. robroy wrote:

    Let’s see. You ran your company into the ground. Is that what you considered talented?
    If the company has been run into the ground, why should MY tax Dollars (and those demanded of my grandchildren) be taken to bail out the ruined company? Why ruin me and my family to save that which was ruined by others?

    Damn! In real life, if someone burns down my house he is taken to jail. Now in this existential government my neighbor burns down his own house and the feds take my house and give it to him!

    I think that the essence and proof of a sinful world is the bizzarre evidence that we are immersed in every day.


  6. drjoan says:

    I wish I knew where it was from but there is a column at various sites about Obama taking Super Bowl trophies from the Pittsburgh Steelers and distributing some of them to the likes of the Detroit Lions and the Cincinnati Bengals.

    It is just as telling as what is REALLY happening. And by the way, why aren’t sports figures or entertainers–those making in the 7 figures–being affected by this?

  7. tgs says:

    Lets take this as a good sign. It shows that when the American people do get riled up Congress will react. In this case it’s about an infinitesimal part of the bailout picture but hopefully they’ll soon start seriously protesting the whole bailout fiasco. In that direction lies hope.

  8. Paul PA says:

    I agree – why not just let all the banks be owned by foriegn companies – then someone else could pay to bail them out if they are in trouble (or they could decide to just let them fail). Furthermore – then we won’t have to pay people such large amounts of money – if they are worth it someone else can pay them

  9. Bart Hall (Kansas, USA) says:

    Whilst not doing more than pointing out the huge constitutional issues involved, specifically [i]bills of attainder[/i] (laws targeting individuals or small groups of individuals) and [i]ex post facto[/i] (passing a new law to punish something that has already happened), it is necessary to underline that [b]not everyone at AIG was a bad manager[/b].

    Liddy, who is a volunteer in his job, decided to provide bonuses not to the people who ruined the company — they’re long gone — but to those best able to sort out the current mess and perhaps salvage value for the new taxpayer-owners of the company.

    To demonize them and punish them is political demagoguery of the very worst sort.

  10. Sick & Tired of Nuance says:

    Hi Bart,

    The [i]bills of attainder[/i] and [i]ex post facto[/i] issues most likely do not apply to taxes. I believe that it would only make a difference if it were a criminal punishment. Bill Clinton already did a retro-active tax back in the ’90s and it stood legal challenge. Just thought I would put that out there.

  11. Bart Hall (Kansas, USA) says:

    Yeah, STN, I know that courts have generally held with Congressional taxation and other such punitive approaches to both b/a and e/p/f, but it’s obvious in this case that Congress are attempting to make these things just wide enough to escape the obvious conclusion.

    The fact that these rules won’t apply to athletes and entertainers, many of whom work in industries having received at least an aggregate $5B of government money, makes it clear what is intended, and I think it stinks.

  12. jaroke says:

    The government is attempting to apply responsibility and accountability to the financial industry – measures that are long overdue. In no way is this a McCarthyite witch hunt. As to entertainers and athletes earning immense incomes, tax reform, earnestly to be desired, will tranfer a substantially larger portion of their incomes to the public purse, another outcome greatly to be desired.

  13. Sarah1 says:

    RE: “. . . another outcome greatly to be desired.”

    Sure — desired by collectivists like Jaroke.

    But not for me and not for anyone else committed the Constitution of our country and a free Republic.

  14. Dave B says:

    There is a great column by Krauthammer that points out how tiny the bonuses are compared to the money involved. the 160 million is not much compared to the BILLIONS involved. It is miniscule. How far back are we going with this? Remember Raines of Fannie Mae fame got a 6 million dollar bonus for ignoring the warnings of McCain and Bush and running it into the ground. THe other problem is that these were LEGAL contracts. Suppose I went to my butcher bought steak at $7 a pound, got home cancelled my check, called him up and said the hamburger was $3 a pound, steak isn’t worth $7 so I’m paying you $4. This, I believe is stealing. Wopuld you want to work for people (that is the US citizen) if we don’t keep our word and legal contracts? The government knew about the 160 million in the first of March. The GOVERNMENT was negligent in not renagotiating the contracts.

  15. tgs says:

    Again, the $160 million is infinitesimal in the scheme of things. The bottom line is that there should be NO bailouts period. The people need to feel and express the same fury over all this pouring out of trillions as well as how it’s being spent as they have over this tiny by comparison $160 million. Obama won’t, but Congress will react to that.

  16. Billy says:

    Irrespective of the minuscule nature of the bonuses in the overall giveaway, the fact is that Congress and the Administration knew or should have known of the bonuses (in fact, the people whom Congress (Dodd) and the Administration (Geithner and Emanuel) put in charge of the stimulus package have admitted knowing). So the breast-beating by either Congress or the President is sheer hypocrisy of the first order and should be met with opposing votes at the polls next time around (this may have sounded the death knell for Mr. Dodd’s career – one can only hope, and also hope that he would take Mr. Frank from the other chamber with him in 2010.)