A zesty dose of outrage from the Senate’s second-biggest recipient of AIG campaign contributions. That’ll buy you a vote on the bailout, boys, but not even Schumer’s going to brave the flames of this populist brushfire. Reid said this morning that they’ll have a bill ready to go within 24 hours to target the bonuses at possibly a 90% rate; we’ve been arguing in Headlines ever since about whether that constitutes an unconstitutional bill of attainder. I’m skeptical as I suspect even a heavy tax wouldn’t qualify as “punishment” within the meaning of the clause, especially when recouping part of a massive bailout of a company the government now owns. An equal-protection argument would be hard too, as courts typically defer to legislatures unless they’re targeting a group based on race, gender, or religion. Sounds like the point is moot, though, as they’ll probably draft the bill broadly enough to hit any company that falls within its narrow parameters:
Rep. Gary Peters (D-Michigan) submitted a bill yesterday which would implement a 60% tax rate on all bonuses about $10 thousand, targeting employees of firms in which the U.S. government holds an equity stake greater than 79 percent. The bill is clearly aimed at the excesses of AIG, but is believed to avoid rejection as a “bill of attainder” since the bill covers any firm in which the government may hold nearly 80 percent or more ownership stake. Given the current conditions within the financial industry, it’s not a stretch to imagine other large banks fitting similar conditions if their liquidity does not improve.
Exit question: Is it time yet to start the AIG managed bankruptcy watch?