AIG clawbacks: barely legal

Our Conor Clarke asked Larry Tribe whether or not one could, legally, tax away the bonuses paid to AIG employees.  Larry Tribe seems to think that the answer is yes

This has interesting implications for the banks that have already taken government funds, and certainly, any banks that might be considering doing so in the future.  I suspect it would be hard to write a specific tax that applied only to AIG and not, say, to Citibank--and that's assuming that the Democrats in Congress would want to.  I think it's safe to assume that if this passes, any banks that possibly can will rush to return bailout funds to the Treasury.  And perhaps this is a good thing.  But the attempt to shield shaky banks behind a general distribution of funds will be over.

I suspect that it would also not do any good things for whatever future plans Treasury has.  All of the plans I'm currently aware of involve substantial voluntary participation from sound financial institutions.  I don't think you'll get much voluntary cooperation from banks if you declare that any acceptance of government funds will involve substantial risk that they will appropriate your paycheck.

Presented by

Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

How to Build a Tornado

A Canadian inventor believes his tornado machine could solve the world's energy crisis. The only problem? He has to prove it works.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

How to Build a Tornado

A Canadian inventor believes his tornado machine could solve the world's energy crisis.

Video

A New York City Minute, Frozen in Time

This short film takes you on a whirling tour of the Big Apple

Video

What Happened to the Milky Way?

Light pollution has taken away our ability to see the stars. Can we save the night sky?

Video

The Pentagon's $1.5 Trillion Mistake

The F-35 fighter jet was supposed to do everything. Instead, it can barely do anything.

More in Business

Just In