March 20, 2009

The House, incredibly, has passed a bill imposing a punitive 90% tax on the bonuses of employees at large TARP-recipient banks whose household income (including -- or even predominantly consisting of -- their spouses') exceeds $250,000, or $125,000 if filing singly. If enacted, and if not evaded by a reshuffling of compensation categories from bonus into salary categories, the bill would likely lead to a destabilizing mass exodus of specialized talent from the Citicorps and Bank of Americas to competitive institutions not subject to the limits, with taxpayers and the FDIC picking up the ultimate bill as formerly-healthy divisions of these banks and other financial institutions start cratering. [WSJ, Blodget] Even Josh Marshall at Talking Points Memo, anything but a pro-business or conservative commentator, is dubious. [A further roundup: New York mag. And Daniel Schwartz is the go-to person (first, second posts) on the question of whether Connecticut law allows the employees to sue AIG for double damages if deprived of bonuses to which they have a legally accrued right.]

Meanwhile, at much-admired Boing Boing, Cory Doctorow is promoting a union-backed campaign to intimidate AIG executives and their families at their homes. One commenter proposes that similar treatment be meted out to major donors to the Republican Party ("I hope no innocents are hurt. But this is inevitable"), while another pronounces the possibility of an AIG executive actually being killed as "refreshing". It's quite a comment thread.

Updates: follow-up posts here and here.