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.

Riding Unicycles in a Cave

"If you fall down and break your leg, there's no way out."

Join the Discussion

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

blog comments powered by Disqus

Video

Riding Unicycles in a Cave

"If you fall down and break your leg, there's no way out."

Video

Carrot: A Pitch-Perfect Satire of Tech

"It's not just a vegetable. It's what a vegetable should be."

Video

An Ingenious 360-Degree Time-Lapse

Watch the world become a cartoonishly small playground

Video

The Benefits of Living Alone on a Mountain

"You really have to love solitary time by yourself."

Video

The Rise of the Cat Tattoo

How a Brooklyn tattoo artist popularized the "cattoo"

More in Business

Just In