Recession? Not for These Guys

I recently heard about a bill that is being pushed through by Congress in the US, which will see them slap a 90% tax rate on the bonus' received by executives of any nationalised banks. This happened after there was a public outcry in America when the bankers who got us into this mess, not only got off scot-free, but received huge pay-off in the form of bonuses. Here's a video of the efforts being put in to retrieve bonuses that AIG executives were given:



Make Them Pay

Make them pay I say. We had to bail out the banks after the bankers bought dodgy loans because of the housing market boom. These are the very people who should have said "Hold on, is this really wise? We're putting all our eggs in one basket." Even without the dodgy loans they must have realised that the boom wouldn't go on forever. The bad loans simply made the fall even harder. After being paid good money to make this bad decision, instead of being fired from their jobs, they resigned. This is all well and good if it was your average employee, who would forfeit a severance package if fired, but these guys still got a pay package and what a package! With reports of bonuses totaling $200 million for AIG executives alone, most won't have to work another day in their lives.

And it's not just bank executives in the US that got bonuses; the same has happened here in Ireland. Michael Fingleton, ex-chief executive for Irish Nationwide, received a €1 million bonus pay package after the bank was nationlised. However, while Barack Obama proclaims that "no boss of a rescued bank should receive more than $500,000" and that they will "pursue every legal avenue to get it back" the outlook is not so rosy for Irish tax-payers. A spokesperson for the Department of Finance said there is no intention to introduce an Obama-style tax of 90% on bonuses of banking executives in institutions covered by a guarantee and Brian Cowen is projecting a negative outcome to the mess claiming that there's very little hope of recovering bonuses from executives who quit before the bank was bailed out. In relation to the other bonuses, the Taoiseach said that Minister Brian Lenihan "will decide, on that basis, what are the legal avenues available to him and what way can it be arranged that the issue can be dealt with satisfactorily". So no luck there either. The only silver lining is that no more bonuses will be paid out in the near future. Also, Fingleton's expected successor declined the role when it emerged that the head of Nationwide would get no more than €360,000. Peanuts really.

All in all, it looks like we handed out €7 billion to the banks so they could congratulate their executives on getting us into this mess. Makes you want to relocate to a low-tax country like Barbados where the weather is good and the government aren't the ones who rob you blind.