"Waaaaaaaaaaaaaaaaaaaaaaah stop picking on me stop picking on me it's not fair fair fair fair!"
That's basically what the CEO of Wells Fargo is saying in the article If Goldman Returns Aid, Will Others?
"Is this America, when you can do what your government asks you to do and then retroactively you also have additional conditions put on?" he asked after a speech at Stanford University, according to Reuters. He went on to say that he wished he had never accepted the TARP money.
The outrage! How dare they! Retroactively changing the terms of the agreement once they're already on the hook for money they desperately need. SHAME! This isn't the country our founding fathers had in mind at all.
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You know... this is actually sounding kinda familiar... where do I remember hearing something like this? Let me think.... retroactive changes in contracts... paying ridiculous percentages... hidden terms and conditions...
Oh yeah! This is what Credit Card companies do to consumers ALL THE TIME.
It's done with such prevalence in the credit card industry that banning the practices are a plank in the Obama 08 platform:
Establish a Credit Card Bill of Rights to Protect Consumers:
Obama and Biden will create a Credit Card Bill of Rights to protect consumers. The Obama-Biden plan will:
* Ban Unilateral Changes
* Apply Interest Rate Increases Only to Future Debt
* Prohibit Interest on Fees
* Prohibit "Universal Defaults"
* Require Prompt and Fair Crediting of Cardholder Payments
So you little bankies, what's it feel to get a dose of your own sick medicine? Yeah we don't much like it either.
In the end, eye for an eye or otherwise, I think the bonus tax is pretty awful policy, and it has the stink of hysterical Terri Schiavo style knee jerk legislation, that most likely won't stand up in court.
In the NYT today, there's a good example of why this all sucks. The AIG ship sank, and now we're drowning the crew, when we should be saving the passengers.
Sacking everyone who worked at AIG in the past 10 years reminds me of when we invaded Iraq and then fired the entire Iraqi army. Hi there Insurgency, nice to meet you, goodbye trillion dollars.
These people will find jobs at the counterparties to AIG debt, with nothing but a sense of having been wrongly prosecuted in an extrajudicial court of the press. How do you think tax payers will fair in that situation?
The approach I want to see enacted (and it looks like the Obama admin is headed this way) is to look holistically at compensation in the financial sector in general. We know the impact that the slash and burn approach to the financial system had: brief outsized profits, at the expense of systemic stability. Time to re-write the book on how finance can be done with an eye not to blowing bubbles, but to overall systemic resilience.
...But in the meantime, it's kinda fun to see the bastards squirm.