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  • More on the Bonus Issue

    Posted by David Foster on March 21st, 2009 (All posts by )

    Powerline:

    Wells Fargo didn’t want any TARP money, but the government forced it to take more than $5 billion worth, so Wells Fargo employees who receive bonuses would be subject to Pelosi’s proposed tax. Say you’re a teller at a Wells Fargo branch in Minnesota and you’re married to a lawyer who makes $250,000 this year. You get a $10,000 bonus for your good work during 2008. The government steals it all (90 percent federal plus 8.5 percent state plus, unless it’s included in the 90 percent, 3 percent Medicare). That is simply insane.

    If the Pelosi bill is actually enacted into law (which I still think is doubtful) and upheld by the courts, there is no limit to the arbitrary power of Congress. In that event, we have no property rights and there is no Constitution–no equal protection clause, no due process clause, no impairment of contracts clause, no bill of attainder/ex post facto law clause.

    See my previous post here.

     

    10 Responses to “More on the Bonus Issue”

    1. Dan from Madison Says:

      This legislation is the ultimate in garbage. The Supreme Court does have a record of not wanting to touch cases like this, but I think this may be an exception. It is such a blatant example of an ex post facto law…if allowed to stand there is no limit to what can be tossed out there.

      Ultimately the Congress and President wrote garbage legislation in the first place, started to get burned by it, and tried to put the horse back in the barn. No dice.

    2. Pursuit Says:

      This is spot on. Good banks were encouraged to enter the program for the very reason that the gov. did not want participation in the program to indicate wobbly financial condition. Imagine, had it been any other way, signing up for TARP could have resulted in a run on participant banks, thereby wiping out the tax payer’s investment in the TARP bank. So, good banks do the government a favor and then get whacked for their efforts! Compound this with the ritual beating Mr. Liddy took this week for agreeing to help out, and it is hard to see why any healthy financial institution will agree to go along with any government program that is proposed by our new Treasury secretary.

      Fool me once, you’re an asshole. Fool me twice, I’m an asshole

    3. FortWorthGuy Says:

      I have seen on many blogs the statement that this bank that bank did not want to take TARP money, but that the Feds “forced it to take” (quote from Powerline) the cash….or words to this effect. But in no case was ever any bank official quoted as having said this on the record. Can someone cite (chapter and verse so to speak) where someone from Wells Fargo or any other bank has so stated this…or is it just an urban legend that is floating around in the blog-sphere? I am sure that it is out there somewhere, but I want to be able to verify this for myself before actually stating it as a fact. Thanks….

    4. Jonathan Says:

      I don’t know if the government told the banks they had to accept TARP money. I don’t think it matters. Big banks depend heavily on the good will of bureaucrats and legislators. Wells Fargo may have thought it had no choice but to go along with the government in this case.

    5. Jonathan Says:

      Also, don’t count on the Supreme Court. The SC upheld McCain-Feingold, Kelo, due process for foreign terrorists, and went the right way on Heller by only one vote.

    6. renminbi Says:

      Our present political class is worthless.What do we do about them?

    7. Shannon Love Says:

      FortWorthGuy,

      But in no case was ever any bank official quoted as having said this on the record. Can someone cite (chapter and verse so to speak) where someone from Wells Fargo or any other bank has so stated this

      From the New York Times

      Wells Fargo’s chairman, Richard M. Kovacevich, didn’t want to take the federal government’s bailout money in the first place. Now, he is assailing the government for imposing new restrictions on financial institutions that receive federal money, and he calls a federal plan to subject big banks to stress tests “asinine.”

      There was a lot of pressure on banks to take some TARP funds in order to disguise which banks really had trouble in order to prevent runs on those institutions. As Jonathan pointed out, their business is at the mercy of the goverment and in addition when the government shows ups and says, “It’s an emergency, we need you to do ‘X'” most people will do it.

    8. david foster Says:

      fw guy…

      From a speech yesterday by WF Chairman Dick Kovacevich, who does not sound like he’s in a very good mood:

      “Is this America–when you do what your government asks you to do and then retroactively you also have additional conditions? If we were not forced to take the TARP money, we would have been able to raise private capital at that time and not needed to cut the dividend.”

      http://www.bankstocks.com/ArticleViewer.aspx?ArticleID=5724&ArticleTypeID=2

    9. Jonathan Says:

      Kovacevich is merely saying what everyone is thinking.

    10. FortWorthGuy Says:

      To Shannon Love and David Foster: Thanks for the information!