Monday night, when I wrote about tax clawbacks, I was afraid that the idea would be written off too quickly based on an oversimplistic view of the law. Two days later, it's like a movement. At least six members of Congress are on record as trying to craft some sort of tax clawback, Conor Clarke has Larry Tribe opining that a well-crafted clawback would be Constitutional, and widely read bloggers like Kevin Drum and Felix Salmon have considered the idea supportively. Tonight Bloomberg reports that

The senior members of the Senate Finance Committee from both parties proposed taxes totaling 70 percent on bonuses at AIG and other companies getting federal money during the U.S. financial meltdown. House Speaker Nancy Pelosi directed committees there to draft several alternatives and said her chamber may consider a bill as early as this week.

If we're going to do this, and it looks like we might, we had better get it right. Regardless of the legal technicalities, a tax clawback does represent a kind of escalation. It sits awkwardly with norms and ideals that are less a matter of law than we think but that are nevertheless an important part of American political culture. In our better moments, we dislike "collective punishment" and try not to change the rules of the game out from under people midstream. On balance, I think the benefits of a well designed tax clawback could exceed its costs. But a poorly designed clawback would set a corrosive precedent for no other purpose than to salve and misdirect public rage.

The main benefit of a tax clawback would not be to punish bankers for the looting they have already done, but to set a precedent. Many commentators (e.g. Surowiecki) have pointed out that during the credit bubble, market discipline failed not so much because shareholders expected to be bailed out, but because the employees who run financial firms could cash out short-term gains regardless of long-term costs to shareholders and taxpayers. The precedent of a tax clawback would put future employees of systemically important financial institutions in jeopardy. They would know that if their mistakes provoke a taxpayer bailout, their personal wealth would be on the line. Eliminating their sense of inviolability, making it impossible for bankers to simply walk away from the losses they impose on investors and taxpayers, would, I think, result in structural changes to financial institutions. Risk-takers would congregate in definitely-small-enough-to-fail boutiques and hedge funds. Managers of systemically important banks would lobby for regulation to prevent competition from forcing them into risky practices that might provoke a clawback of their personal net worth when things go bad.

The dumbest possible tax clawback would be a punitive one-off designed to recoup the AIG bonuses. The brazenness of those bonuses has galvanized public anger, and served usefully as a tipping point, but in the scheme of things recovering less than half a billion dollars of a multitrillion dollar bailout will not matter very much. In order to set a useful precedent, a tax clawback needs to be broadly and rationally targeted. That is, employees of any and all institutions whose weakness necessitates a public bailout must be subject to the clawback. The Paulson Treasury, as a matter of insidious policy, made it difficult to distinguish between failing and healthy banks by forcing solvent banks to suck up TARP money along with the zombies. A good clawback proposal would encourage healthy banks to return any public assistance they've received over a period of several months, and then claw back funds only from employees of banks that are unable to return the funds without violating capital or liquidity requirements. (The law would have to address wrinkles like how to let banks "return" noncash assistance such as asset guarantees.)

A good tax clawback would not have to be very punitive. While getting back the money is an important purpose of a clawback, establishing the principle that the people who run financial institutions will be made responsible for cleaning up their own messes is far more important. Levying a 100% tax on bonuses might be satisfying, but so draconian a law would only pass if it were uselessly addressed to a single scapegoat rather than applied to financial institutions broadly. I'd recommend a 50% tax on compensation above maybe $200,000 in any year during the four years prior to the public assistance. Since this tax would represent an unexpected expense to the people it would affect, I'd allow the liability to be spread out over a period of several years. In general, the law should be structured and justified as a means of having the parties responsible for a financial disaster bear part of the cost of the cleanup, not as punishment.

One might worry that if the tax is too mild, future bankers might not be discouraged from taking foolish risks at critical institutions. If a big bet can get you a $10M bonus this year, but you'd have to return $5M if things go wrong next year, it might still be worth taking the bet. I think there's less to this than meets the eye. Once a firm precedent is established that previous years' compensation is fair game to pay for a taxpayer bail out, bankers would have to keep in mind that tax rates can always change, and that legislators might be less reticent next time around, when the use of clawbacks would not be novel and controversial. The law might even establish a higher tax rate for future failures.

In order for an ex post tax to be Constitutional, it should apply broadly and have some legitimate purpose besides just punishing someone. Kevin Drum gets a bit sardonic about this:

So it looks like the answer here is simple: even though the purpose of this tax would pretty clearly be punitive with extreme prejudice, we need to carefully pretend that it's not. And we need to make sure the legislative history shows that it's not (it should be "manifestly regulatory and fiscal" Tribe says). Then everything is kosher! We can tax their socks off!

While a lot of us might want to be "punitive with extreme prejudice", this is too cynical a view. The requirements of the Constitution seem perfectly consistent with imposing a clawback that permanently alters the incentives of the people who run systemically important banks. A good law would be both retrospective and prospective. It would help defray the costs of the current crisis while firmly establishing the principle that the individuals who run critical financial institutions can be decompensated if they let those institutions melt down on their watch. The analogy to Superfund is quite close, I think. If we do this, we oughtn't conceptualize what we're doing as finding a loophole we can use to shaft the f@kers. We should craft a good law that lets us to recoup some of the cost of cleaning up existing messes, and that defines a framework for sharing the cost any future messes with the people most responsible for them.

Steve Randy Waldman — Wednesday March 18, 2009 at 5:41am permalink
This solution equates to retroactive implementation of vesting provisions on direct (non-equity) compensation. Vesting of direct compensation in this context would depend on future capital adequacy in general, including the requirement or not for government recapitalization. The problem illustrates that both direct compensation as well as stock options have option characteristics that are potentially lethal for existing and future outright shareholders, including the government.
3.18.2009 8:20am
Mitch (www):
There was an interesting bit about the Swedish approach in an interview with James K. Galbraith:

There is a provision in Swedish law, which holds that when a bank is insolvent, if it continues to incur losses, past the point of insolvency, those losses are the personal liability of the directors.

It's a nice bit of incentive design IMO. Unfortunately, we're past the point where it could help this crisis, but for future ones I like the idea.
3.18.2009 8:32am
RueTheDay (mail):
I agree wholeheartedly that this cannot just be a punitive one-off for AIG. We have to change the structure of the Wall Street compensation model to disincentivize long term risk taking for short term gain with the expectation that one will either not be around or held harmless when it blows up down the road. However, I have a philosophical issue with this statement: "I'd recommend a 50% tax on compensation above maybe $200,000 in any year during the four years prior to the public assistance." The ultimate goal has to be no more public bailouts. Or rather, no more NEED for public bailouts. Otherwise they will just figure out ways to game the system (e.g., make sure it doesn't blow up until 4 years and 1 day after the transaction).
3.18.2009 8:33am
Yancey Ward (mail):

I don't care how narrowly or broadly you design this clawback through the tax laws- it still amounts to ex post facto and bills of attainder lawmaking. You claim to want to set a precedent, and you definitely would with such laws- it will only be a matter of time before such law making will be used to punish any out of favor group. This is a door that you should not want to open. If you want to claw back the bonuses, do it through existing body of laws, and if you can't, then let it go. The principle you are advocating we abrogate is worth more than 1000 times amount of these bonuses.
3.18.2009 10:03am
john c. halasz (mail):
This AIG bonuses scandal is relatively trivial and a distraction, analogous to a technique well-known to pickpockets. If you're going to propose a claw-back tax which would enforce some real "Ricardian equivalence",- (rather than the theoretically imagined kind),- with constraining/deterring effects on budget expenditures, why not go with an across-the-board surtax on the net worth/wealth of millionaire households for as long as necessary, starting, say, at .5% per annum at $1 million and rising to 3% at $100 million, with suitable carve-outs up to some point for retirees and the invested capital of small businessmen? Just about everyone covered, if they haven't subsequently lost their loot, has benefited one way or another and to some degree, the more likely so, the higher up the chain you go, from a) gaming the system for tax cuts for the wealthy investor class, and b) the financial bubble, which those of us, who long understood what was going on and foresaw its dire consequences, know amounted to a deliberate looting of the household sector and a robbing of the broad American working-class of a fair share in economic and productivity growth, by dominant economic interests/powers-that-be, whose synedoche is Wall St. Such a tax would go a long way toward addressing the paradox that the U.S. economy needs simultaneously to increase savings and collectively/publicly dis-save, while also requiring a massive restructuring of debt,- (otherwise known as sovereign bankruptcy),- which involve severe concerns about the value of the US$, which needs to devalue, but shouldn't be managed into a catastrophic collapse. That such a tax would marginally lower financial asset prices is to-the-point, since lower financial asset prices mean higher real returns, to incentivize savings and real investment, which lowered asset prices are a normal part of the recovery process anyway. While we're at it, restructuring income taxes into a progressive consumption tax, which would lessen the burden on really invested productive capital, while increasing the burden on excessive and conspicuous consumption, would be a good idea, perhaps also with some increased negative tax features at the bottom, to cushion the blow of changing structural dynamics on the wage earning class. Add on a value-added tax to finance a public, single-payer universal health insurance system, with suitable cost-containment/rationing features, and we might actually be progressing somewhere. But then, the American love and worship of money, like the American exultation of individualism and American exceptionalism itself, is a form of idolatry, whose veil of illusions is perhaps too thick to be painfully torn away, and have this nation of uncultured chatterers and permanent adolescents realistically face the prospect of locomotion on feet of clay.
3.18.2009 1:45pm
It seems like a slippery slope. Do we do this for the airlines that have needed so much federal assistance because they can't get their businesses in the black - yet still give out bonuses to top execs? What about the car companies that just demanded billions in bailout money - taxpayer money - to support an industry that has staunchly fought against technological innovations that would save money and energy, improve fuel efficiency, make cars more affordable and compete with foreign manufacturers.

How do we determine a "letting things fail" versus external events outside their control? I am not saying that is the case here, but it might be some day.

What about the people that LET themselves get overextended by purchasing homes they could not afford, on credit they didn't have, with a variable rate they didn't understand. People weren't saving and putting down a big deposit to make sure they had a good rate. They got into huge debt all on their own.

I agree that there needs to be responsibility. I think it is OBSCENE for any company to award bonuses when people don't do their jobs - and do them well. If your job is to run a bank, and you cause a crises for the nation, you shouldn't get a bonus. But does the same apply for if your job is to run an electric company, and you let the power go out and people die - but you get millions in bonuses still?

What about newspapers? I would think holding up the government to public scrutiny, reporting the news and asking questions - is incredibly important to us as a nation. But here we are, watching papers shut and reporters get laid off and the news trickle. But the bosses keep their big pay checks, while readers suffer.

Where do we draw the line on "systemically important" - and do we just leave it at banks?
3.18.2009 2:33pm
Eric Yendall (mail):
I'm all in favour of a tax claw-back applied to Congress which manifestly failed in its responsibilities to the American people over the past eight years.
3.19.2009 3:06am
MattJ (mail):
If we are going to do this, can we make sure that it applies to the counter-parties of AIG that the AIG bailout made whole? Surely those banks have benefited just as much as AIG from the public largess, and I for one would like to see the bonuses paid for by that money clawed back.
3.20.2009 2:26pm
raivo pommer (mail):
Raivo Pommer

US Vertpapieren

Die amerikanische Regierung wird in dieser Woche ihren Plan vorlegen, wie Banken und andere Marktakteure von jenen giftigen Wertpapieren und faulen Krediten befreit werden sollen, die seit Monaten den Kreditkanal an Haushalte und Unternehmen verstopfen. Womöglich schon an diesem Montag werde Finanzminister Tim Geithner Einzelheiten zum Kauf fauler Hypothekendarlehen und damit verbundener Wertpapiere für bis zu eine Billion Dollar bekanntgeben, hieß es am Wochenende in Washington.

Berichten zufolge wird die Regierung eine neue Investmentgesellschaft mit dem Namen „Public Investment Corporation“ gründen. Sie soll mit einem Startkapital von 75 bis 100 Milliarden Dollar ausgestattet werden, die aus dem im vergangenen Oktober beschlossenen Rettungspaket für das Finanzsystem kommen sollen. Die Gesellschaft, die eine Reihe von Investmentfonds auflegen wird, soll eng an das Finanzministerium und an die staatliche Einlagensicherungsgesellschaft, die Federal Deposit Insurance Corporation (FDIC), angebunden sein. Ziel des Plans ist es, nach Möglichkeit auch privates Kapital zum Kauf der problematischen Wertpapiere und Kredite zu mobilisieren. Um privaten Investoren Anreize hierfür zu geben, will die Regierung nicht nur finanzielle Zuschüsse, sondern auch Ausfallgarantien geben. Die FDIC würde dann einen Teil der möglichen Verluste übernehmen. Die Schaffung dieser öffentlich-privaten Partnerschaft, die Geithner vor einigen Wochen in Aussicht gestellt hatte, ist aber nur ein Element des Vorhabens.
3.23.2009 6:07am
raivo pommer-eesti (mail):
Raivo Pommer-Eesti

Frankreich krise

Aus Protest gegen geplante Entlassungen haben Arbeiter in Frankreich erneut einen Firmenchef in ihre Gewalt gebracht: Der Leiter eines Werks für Medizinprodukte des US-Konzerns 3M im zentralfranzösischen Pithiviers wurde in der Nacht zum Mittwoch in der Fabrik festgehalten.

Das teilte die Polizei am Morgen mit. Gewerkschaftsvertreter gaben als Grund die Unzufriedenheit der Beschäftigten mit Abfindungen bei ihrer Entlassung an.

Die Arbeiter hielten die ganze Nacht lang Wache vor dem Büro des Firmenchefs. "Wir verlangen eine Neuverhandlung der Abfindungen und eine Umzugsprämie", sagte Gewerkschaftsvertreter Jean-François Caparros. In der Nacht seien darüber Verhandlungen geführt worden, die aber nicht zum Erfolg geführt hätten. Am Vormittag sollten sie wiederaufgenommen werden. "Alle sind sehr motiviert", sagte Caparros. "Diese Aktion ist unser einziges Druckmittel." Zu gewalttätigen Auseinandersetzungen sei es nicht gekommen.
3.25.2009 3:22pm
raivo pommer-eesti (mail):


Nach jahrelangem Wachstum streicht der erfolgsverwöhnte Internetkonzern Google in der Krise zunehmend Stellen. In den Bereichen Verkauf und Marketing sollen weltweit 200 Jobs wegfallen, kündigte Google in seinem Internetblog an. Das Unternehmen hat insgesamt 20 200 Mitarbeiter. Google habe in seiner raschen Expansion einige Überkapazitäten geschaffen, schrieb der unter anderem für den Vertrieb zuständige Vizepräsident Omid Kordestani im Internet. Seit Anfang des Jahres hat der Konzern bereits 100 Stellen im Personalbereich gestrichen sowie einige weitere in kleineren eingestellten Geschäftsfeldern.

Dennoch sieht das Unternehmen trotz der weltweiten Wirtschaftskrise großes Potenzial für ein weiteres Wachstum. "Es gibt keine fundamentale Kraft, die uns vom Wachsen abhalten könnte", sagte Google-Mitgründer Larry Page dem Schweizer Wirtschaftsmagazin "Bilanz". "Ich bin noch immer sehr optimistisch, was unsere Produkte und unsere Marktposition angeht." Google habe heute mehr Möglichkeiten im Kerngeschäft als je zuvor. Wie lange die Rezession auch noch dauern werde, "wir werden immer mit vollem Dampf vorwärts fahren", sagte Page. Derzeit arbeite Google an einer Technologie, die das Anzeigengeschäft für TV-Werbung mit Werbeplatzierungen auf der Videoplattform YouTube verbinden solle, berichtet das "Wall Street J."
3.28.2009 2:20pm
raivo pommer-eesti (mail):


Den Betrag von einer Milliarde Euro hatte das Pariser Finanzministerium im Februar 2008 als mögliche Steuerausfälle des französischen Staates in der Liechtenstein-Affäre genannt.

Haushaltsminister Eric Woerth bestätigte am Dienstag, dass drei Fälle von Unternehmen an die Justiz weitergegeben worden seien. Er wolle aber die Angaben der Zeitung zu den Namen betroffenen Firmen "weder dementieren noch bestätigen", sagte Woerth im Sender LCI.

Ziel der Ermittlungen müsse es sein, die Wahrheit aufzudecken, "über das, was in der Vergangenheit passiert ist, woher das Geld in diesen drei Affären kam". Und schließlich gehe es darum, ob Steuern nachgefordert und Strafen verhängt werden können.

Total wies inzwischen einen Bericht zurück, wonach der Konzern in Liechtenstein eine Stiftung unterhalte, über die Gelder am Staat vorbei geschleust würden. Ein Sprecher sagte, das Unternehmen betreibe in dem Fürstentum lediglich zwei Tankstellen. Michelin teilte mit, man habe kein einziges Konto in Liechtenstein.
3.31.2009 11:26am
raivo pommer-eesti (mail):

Witschaftkrise 2008-2015-Pensionkrise u.a.

Im Kampf gegen die Wirtschafts- und Finanzkrise hat die Europäische Zentralbank (EZB) den Leitzins im Euro-Raum auf ein Rekordtief gesenkt. Der wichtigste Zins zur Versorgung der Kreditwirtschaft mit Zentralbankgeld verringert sich um weitere 0,25 Prozentpunkte auf 1,25 Prozent.

Das teilte die EZB nach ihrer Ratssitzung in Frankfurt mit. Das ist der niedrigste Stand in der Geschichte der Notenbank. Experten hatten mit einer deutlicheren Senkung auf 1,0 Prozent gerechnet.

EZB-Präsident Jean-Claude Trichet hatte Anfang dieser Woche auf eine weitere Verschlechterung der konjunkturellen Lage hingewiesen. Niedrigere Zinsen verbilligen Kredite für Unternehmen und Verbraucher und können so Investitionen und das Wirtschaftswachstum insgesamt anschieben. Seit Oktober hatte die EZB den Leitzins damit bereits um insgesamt 3,0 Punkte verringert. Eine Null-Zins-Politik wie sie etwa in den USA derzeit gilt, lehnt die EZB bislang ab.

Mit Spannung wird erwartet, wie sich Trichet bei der EZB- Pressekonferenz am Nachmittag zu einem möglichen Kauf von Staats- und Unternehmensanleihen äußern wird. Die US-Notenbank Fed und die Bank of England nutzen dieses Instrument bereits mit dem Ziel, das Zinsniveau direkt zu drücken.
4.2.2009 10:40am
raivo pommer (mail):


Die Deutschen wenden sich angesichts der Finanzkrise von der Konsum- und Erlebnisgesellschaft ab. Nur noch jeweils 21 Prozent halten diese gesellschaftlichen Leitbilder für zukunftsfähig. Das ergab eine Umfrage der Stiftung für Zukunftsfragen unter 2000 Deutschen.

Deutlich mehr Bürger setzen sich für eine «Wohlfühlgesellschaft» ein. 39 Prozent wollen eher «gut leben statt viel haben». Die große Mehrheit der Deutschen wünscht sich eine «Sozialgesellschaft, in der der Staat die Bürger vor Not, Armut und Arbeitslosigkeit schützt und sozial absichert».

«Die Deutschen wollen nach wie vor ein sicheres Einkommen haben und sorgenfrei und ohne Angst leben können», sagte der Wissenschaftliche Leiter der Hamburger Zukunftsstiftung, Prof. Horst W. Opaschowski. «Sie erwarten, dass der Staat seine Sicherheitsversprechen einlöst, und hoffen auf mehr soziale Gerechtigkeit.» Lediglich drei Prozent der Befragten glauben, die Zivilgesellschaft garantiere Freiheit, Gleichheit und Sicherheit. 39 Prozent sehen in Deutschland dagegen eine Klassengesellschaft, in der das Wohlstandsgefälle wachse und die Kluft zwischen Arm und Reich größer werde.
4.3.2009 1:09pm
raivo pommer (mail):

Die Sachsen Bank

hat in ihrem ersten Geschäftsjahr Erlöse von 43,1 Millionen Euro erwirtschaftet. Für dieses und die kommenden Jahre plant sie ein jeweils zweistelliges Wachstum bei Erlösen und Volumina. „Die Sachsen Bank ist in Mitteldeutschland angekommen und ich bin überzeugt davon, dass wir unser Potenzial noch lange nicht ausgeschöpft haben“, sagte der Vorstandsvorsitzende Harald R. Pfab am Montag in Leipzig. Die frühere Sächsische Landesbank stand 2007 nach riskanten Geschäften einer Tochter auf dem US-Hypothekenmarkt vor dem Aus und gehört seit einem Jahr zur Landesbank Baden-Württemberg (LBBW).
4.6.2009 4:22pm
raivo pommer (mail):

Das Volumen an toxischen Wertpapieren

in den Bilanzen von Banken und Versicherungen könnte einem Zeitungsbericht zufolge auf 4 Billionen Dollar gewachsen sein. Diese Schätzung werde der Internationale Währungsfonds (IWF) bei seinem nächsten Bericht zur Lage der Weltwirtschaft am 21. April voraussichtlich nennen, berichtet die britische Zeitung „The Times“ (Dienstagausgabe) ohne Angabe von Quellen. Im Januar hatte der IWF den Umfang der „vergifteten“ Papiere in den Vereinigten Staaten auf 2,2 Billionen Dollar veranschlagt.

Diese Schätzung für die Vereinigten Staaten dürfte nun auf 3,1 Billionen Dollar angehoben werden, schreibt die Zeitung. Hinzu komme ein Volumen von rund 900 Milliarden Dollar für inzwischen toxische Wertpapiere, die in Europa und Asien emittiert wurden.

Die Schätzung des IWF zu den toxischen Wertpapieren verheißt nichts Gutes

Derweil gehen die von der amerikanischen Regierung angekündigten „Stresstests“ für die größten amerikanischen Banken laut Medienberichten in ihre heiße Phase. Die Tests sollen die Stabilität der 19 führenden amerikanischen Finanzhäuser für den Fall einer weiteren Verschlechterung der Konjunktur untersuchen. Bankenaufseher wollten sich in dieser Woche treffen, um die Auswertung der Ergebnisse zu diskutieren, berichtete unter anderem das „Wall Street Journal“ unter Berufung auf Insider.
4.7.2009 11:18am
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