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Mar 16 2009, 3:11 pm by Marc Ambinder

What Congress Can Do To Stop The AIG Bonuses

As recounted below, there's not so much that the executive branch can do -- and should do -- to prevent AIG from handing out loopy bonuses. But why can't Congress pass a law requiring that bonuses granted by a company that has taken bailout money from the Federal Reserve or TARP be taxed at a very high rate? Obviously, Congress would have to find some way to distinguish between legitimate performance pay and illegitimate bonuses, but a one-year tax hike on all such bonuses might not be unpalatable. It's a much saner alternative than to give the Treasury the instruction to root through contracts to find ways of breaking them.

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Comments (5)

eric

Why should the executive have no say in the matter? Shouldn't the billions of federal capital come with contractual obligations to actually go towards solving the crisis?

Colt M

Good idea. Me thinks AIG will pay anything to keep the employee's pie-hole silenced. If they can't then the levee breaks.

Ted T.

The problem with the tax idea, is that a lot of the most egregious AIG bonus recipients are based in London.

Break the contracts -- it can't be very complicated. And as Marc pointed out the price of lawsuits will be public humiliation for the bonus babies -- not to mention discovery, which should make a lot of journalists happy, and a lot of traders very reluctant to sue over the ripped up contracts.

Eric Stoltz

Marc, I have a modest proposal. Pay their bonuses in ShamWow. I hear a set of ShamWow is worth like $50 or something, and you can get them for only around $10 (if you act now). And they throw in a free set! So for every $10 we pay, the talented executives of AIG would get about $100 worth of ShamWow. They should totally go for this, because this is the sort of valuation they peddle.

onedrfl

I just think that the Sham Wow idea is the best one I've heard. So very fitting!