(BN) Vermont Congressman Welch Proposes 50% Tax on Bonuses (Update1)

The only reason this is an issue is the banks are not subject to the normal rules of competition and earn outrageous sums at the expense of the greater economy taking advantage of Fed Borrowing, market opacity and a host of other advantages. Wall Street people are not smarter than everyone else in the economy. Attack the root problem and the bonus issue goes away.

Absolutely.

Abolish the Fed!

Don't entirely disagree.

yep, we should let the unions run the banks too. that will solve it.

What does having (even more) unqualified folks have to do with recapturing some of the profit that the government basically handed to the banks.

how much money would something like this raise??? I am 100 percent for it

I think they should tax professional athletes 50% of all income.

bottom line is that there isnt going to be crazy pay outs on the street this year.

"I think they should tax professional athletes 50% of all income."

It's not the same thing! An overpaid athlete (which I agree are tremendously overpaid) or actor will at the most bankrupt the studio or team owner. No systemic risk involved.

Overpaid bankers who in the process run the economy to the ground have much to benefit from the central banking system (Fed, etc.) and therefore cannot pay themselves whatever they want if that means they put their financial institutions (and as a consequence the entire country's economy) at risk.

I know but they should still be taxed at 50%. My money is wasted on bad movies and terrible performances by star athletes.

Invested with Lenny Dystrka?

even a 50 percent tax on bonuses would hardly make up all the money we as taxpayers have lost from all the fraud that has gone down the past year through tarp and other vehicles of bailout.

it should be 75 percent for bonuses over 1 million, there i said it

The only way I would be for a "tax" for lack of a better word, if it were used to encourage the too large to systemically fail to downsize or split into smaller companies. But if they do that it should not be based on profits, but on their liabilities. Don't like windfall profits taxes.

riverside the gov allowed them to make every penny that was made last year. Goldman, Morgan, BOA, Citi....all of them would be no more if it were not for us the taxpayer. The whole thing stinks and the subpoena's are only starting to fly. They killed capitalism with all there whining and its time for them to PAY!!

Can't we just reenact the regulations that were removed during the Clinton and yes the republican congress in the 90s.
Let banks go back to be being banks and not trying to sell me insurance or stocks.

@truthskr10 We can only dream about that.

Glass Stegal was about underwriting. Doesn't seem to have been an issue in the crisis. What took wall street down was having huge positions in seemingly safe AAA CDOs. I would like to see a wall between classic commercial banking activities and not see the taxpayer subsidize and protect the speculative non-eseential activities, but it is complicated.

Its not complicated at all. If you Fu%*& up you go out of business. It was called capitalism and its gone. Wall Street ruined it all

I like that!
Unfortunately due to the Financial Services Modernization act there is now too much collateral damage. If JP Morgan failed tomorrow, we're done for.

JP Morgan is of the only big banks that has never been t risk of going under. Thats a great bank

Agreed.

samadams - the gvt will end up getting a RETURN on capital for TARP (and us taxpayers) that will outperform most other investment options. and to be sure, obama is already ginning up a caveat in his next budget to recoup losses by the now union controlled GM and others....

think there should be a 70% tax for anyone drinking martinis before 7pm.

range you are clueless, it is widely known that the bailout has already cost us 120 billion $$$. Gone forever

samadams get with it - that number has been widely circulated but even current admin admits it will likely come in much, much lower and most of it will be attributed to TARP funds handed out to auto companies, etc. AND the next budget will no doubt include some form of tax or fee or whatever to recoup any "lost" TARP funds that will be repaid by the financials...

but thank you for your illuminating comments.

i wonder how those mbs purchases will turn out at the end of the day. the GSE bailouts. i wonder why we needed them.

look at the wsj today and see the current surplus that was made on these purchases - still not realized so thats still a wild card.

i saw. end of the day very much a wild card (although i'll take the under), but the GSEs not so much.

agreed. enough blame to go around on the GSEs from both sides of the aisle....

Shows what happens when one cave to the political pressure. Originally the GSE's were opposed to sub-prime lending.

In retrospect, it was/is a horrible model. Market viewed them as gvmt guaranteed. Ran as private enterprises but subject to political sway and influence. Sort of the mess we are in now given TARP...the irony.

In retrospect it should have been obvious that massive amounts of leverage on an asset that pays what 7% can't return 15% a year after losses.

well i hope you heard the hissing sound before it popped.....

"samadams - the gvt will end up getting a RETURN on capital for TARP (and us taxpayers) that will outperform most other investment options. "

no, it won't. like a lying hedge fund, they note that they made money on the part that got returned... but leave out the part they're never getting back. I've heard Geithner make his speech about getting money back several times, but if you actually listen to what he's saying, he never says that the government is getting back even what it put in... just a higher percentage back then feared.

"think there should be a 70% tax for anyone drinking martinis before 7pm."

If the government had to pay them billions to finish their martinis, ok...

But otherwise, this is a nonsensical comparison.

"samadams - the gvt will end up getting a RETURN on capital for TARP (and us taxpayers) that will outperform most other investment options. "

dito what somewherelese said.
we will lose BIG TIME!

120 billion has already been lost. Rangers is clueless. Everybody in nyc knows it except for him

no, it won't. like a lying hedge fund, they note that they made money on the part that got returned... but leave out the part they're never getting back. I've heard Geithner make his speech about getting money back several times, but if you actually listen to what he's saying, he never says that the government is getting back even what it put in... just a higher percentage back then feared.

As I have tried to point out a few times, any TARP that is not returned will end up being recouped by some form of tax or fee that will be borne by the financials. That includes monies given to the non-financials.

Nonsensical comparisons are the result of nonsensical rants.

more to the point---hasn't the tarp spend already been expensed 100% into the national debt?

"As I have tried to point out a few times, any TARP that is not returned will end up being recouped by some form of tax or fee that will be borne by the financials. "

You mean like the one you are railing against here?

I love it! You just proved yourself wrong!

> Nonsensical comparisons are the result of nonsensical rants.

Agreed... you had both.

The proposed tax that prompted this thread is predicated on any recipient of TARP (including the banks that have repaid).All of the repayments thus far have resulted in a positive trade for the gvmt and the taxpayer. What remains to be seen is what will happen to the rest of TARP that has not been repaid. My point is that these monies will be recouped by a budget edict in the form of another tax or fee that will likely be paid by all financial companies and not directly be tied to bonuses. Its a significant difference and the 120 billion number is a strawman despite the cogent views of samadams.

"All of the repayments thus far have resulted in a positive trade for the gvmt and the taxpayer"

well, no duh. The people that have been able to pay don't represent losses. Genius!
problem is, the people who can't pay fall into that "people who haven't paid yet" list.

"My point is that these monies will be recouped by a budget edict in the form of another tax or fee that will likely be paid by all financial companies and not directly be tied to bonuses."

Now you're just playing semantics. the tax will be a function of revenue/profit/something... which is what the bonuses are factors of!

You can pretend its a tax on one or the other, but in the end, its all a share of the same damn pie.

But, thanks for contradicting yourself and supporting what you ranted about originally!

The genius, no doubt, is you given your steely analysis on this one. Its pointless to get into a back and forth with you on a topic that clearly you have no indepth knowledge or experience. You are pretty good at trying to deflect your points by name calling though so I will give you that.

Rangersfan, are you now going to shout down stevejhx for being a "gay translating accountant" and then threaten to punch a few people?

Oh, wait, that's Rhino.

Oh, wait, rangersfan is Rhino.

Hmm

"The genius, no doubt, is you given your steely analysis on this one."

What language was that written in?

"Its pointless to get into a back and forth with you on a topic that clearly you have no indepth knowledge or experience."

Coming from the guy who thought TARP was profitable... funny.

> You are pretty good at trying to deflect your points by name calling though so I will give you that.

I don't think you understand what the word "deflect" means, you aren't using it here.

That being said, what names did I call you?

All I did was point out the bad logic.

a fight between EddieWilson and Rhino!

wow

pot meet kettle

(sorry nyc10022 to use your lines)

http://www.msnbc.msn.com/id/34833757/ns/politics-white_house

Somewhereelse - you should read this article that just came out. Good timing as it basically reiterates all I have been trying to convey regarding any losses from TARP. Bailout losses are expected to be 120 billion (at most) and would be recouped by this fee. Loser. Note bailout losses are expected to be generated by the autos and AIG - again to my earlier posts.

I posted this yesterday in another thread. This is crazy talk. Basically, since everyone is against the banks at this point, they can push this through. Taxing/Fees from the banks to make up for lost auto/AIG TARP funds is wrong.

Can anyone explain to me, why they banks should pay for the loss of AIG and automaker? Is it fair? Why they are not asking GM employees to pay 50% tax?

What about banks that didn't want TARP funds but were pressured by the Treasury to take them? Why should their employees be punished? This is typical political nonsense. Instead of addressing the root of the problem, go after a headline.

Also, there is this myth that taking away the separation of banking and securities business was harmful. That had nothing to do with the problems. (However, de-regulation of CDS and derivatives markets is a big problem.)

> Bailout losses are expected to be 120 billion

Good to see that you finally stopped trying to claim that it made money...

Please don't twist my words. I said all the TARP that was repaid resulted in a positive trade for the gvmt that yielded better than most alternative investments. I also said that the remainder of TARP would be recouped by a tax/fee/levy that would be borne by the financials and not be the autos/AIG that will likely cause the losses.

Don't try to be coy, you and your shotgun buddy samadams said 120 billion was lost forever!! AND banks bonuses should be taxed and, and, and. Hold on, put your pichfork down and try to understand logic and facts.

Republicans blame Obama for not making money on the bailout funds that Bush gave to the banks.

When Obama tries to recover the bailout money that Bush gave the Banks, Republicans then call it an unfair tax.

Hypocrites. Liars. Partisan Morons. Somewhereelse/aka eddiewilson aka nyc10022 you are the king of them!

"I said all the TARP that was repaid resulted in a positive trade for the gvmt that yielded better than most alternative investments. "

My investments all made money, if you leave out the ones that went completely busy.

rangersfan, I'm not twisting your words, you're doing a pretty good job of throwing out the funny stuff all by yourself. You're like another perfitz.

> Don't try to be coy, you and your shotgun buddy samadams said 120 billion was lost forever!!

If you lose $100 in the stock market, and you steal my $100, you didn't lose money in the stock market?

Seriously, rangersfan, too easy. You don't need any help from us with this funny stuff.

> Republicans blame Obama for not making money on the bailout funds that Bush gave to the banks.

Name one republican who did that. Hell, perfitz, can you even name one republican, period? ;-)

"Hypocrites. Liars. Partisan Morons. Somewhereelse/aka eddiewilson aka nyc10022 you are the king of them!"

I'm the king of people because I do the opposite of what they do?

Wow, perfitz, you are a complete moron.

Listen asswipe, TARP was not expected to be repaid within a year. Actually, the gvmt expected to take up to five years to have a better accounting of performance of the program. Since many paid back TARP sooner than expected it allowed the gvmt to use funds for autos and other distrissed homeowners. The unpaid portion of TARP is directly tied to the autos/AIG/distressed mortgages. Its not a matter of cherrypicking investments you dolt. I guess that is why you go by many aliases - your history catches up with you.

No need to start the insults, rangersfan (which exactly what you accused others of).

> Listen asswipe, TARP was not expected to be repaid within a year.

TARP wasn't expected to be repaid, period. And it won't be. Again, you were wrong, TARP won't make money.

"Actually, the gvmt expected to take up to five years to have a better accounting of performance of the program."

You're talking in circles. So what? In five years they'll have better accounting that it lost money.

"Since many paid back TARP sooner than expected it allowed the gvmt to use funds for autos and other distrissed homeowners."

Great, and irrelevant. Because the people who will never pay it back aren't paying it back early.

> Its not a matter of cherrypicking investments you dolt.

Sure it is... you over and over again keep ignoring the ones that lost money... including the banks.

You can keep repeating yourself as much as you want, but you were wrong.
You can reference other things as much as you want, but you were wrong.
You can insult whomever you want, but you were wrong.

TARP lost money, and this won't change, even with just the banks.

You know, its pointless with you. You would have the same effect with one of those giant inflatable rats and a bullhorn. Good luck.

ranger you are so dumb that it is impossible to comprehend how you have survived this long in nyc. You are still saying the same stupid stuff even after Obama validated exactly what we were saying yesterday. And yet here you are still making an idiot of yourself.

He's just like perfitz. Always the absolute clueless who think that everyone else must be wrong.

ahhhh, the shotgun buddies are back. Yes, Obama validated what I said the other day - that any unpaid TARP would be recouped by some sort of tax/fee/levy. My point was that the financials would get hit with that tax and not the autos and AIG who will make up the vast majority of TARP losses.

Was that hard to comprehend? mister lets have a 75% tax on any bonus over a million. now there is some real forward thinking....

"Yes, Obama validated what I said the other day - that any unpaid TARP would be recouped by some sort of tax/fee/levy"

Actually, Obama proved you wrong.

If there wasn't a loss, like you claim, THERE WOULD NOTHING TO BE RECOUPED!

TOO easy. Seriously.

ranger do you realize how stupid you sound???? Yesterday you said there was not going to be a loss. Today Obama came out and said its going to be a 117 billion loss. Yet here you are here today ??? This is basic stuff we are talking about here, what dont you get?

ha ha

somewhereelse/eddiewilson/ny902010/ferrisbueller/aliceinwonderland

I will try one last time - I said that the gvmt booked a gain on the repaid TARP by the financials. The UNPAID TARP (Autos/AIG) will likely end up being a loss. Probably not the 120 billiion that has been reported but irrelevant.

The financials would likely end up paying for this by some sort of tax/levy/fee which is EXACTLY what Obamie announced today. So the financials are basically subsidizing the losses at the autos and others and that is the crux of it. AND thats on top of the gvmt booking good gains on TARP to the financials.

YOU said TARP wasnt expected to be repaid. WRONG, WRONG, WRONG. I could go on, but like I said before - pointless.

> I will try one last time - I said that the gvmt booked a gain on the repaid TARP by the financials.

Yes, and one last time... you were wrong.
Booking your profit/loss and not including the losses is the stuff of perfitz.

Dumb, but funny.

Repeat yourself all you want, you were wrong. You claimed they made money, and they lost money on the financials. That you think you can ignore losses because... uh... you didn't get the money back. Now thats just funny.

"YOU said TARP wasnt expected to be repaid. WRONG, WRONG, WRONG. I could go on, but like I said before - pointless."

Exactly, you could go on and on and on, and you'd still be wrong. It would, in fact, be pointless.

"The financials would likely end up paying for this by some sort of tax/levy/fee which is EXACTLY what Obamie announced today"

Exactly... they put out the tax to cover the LOSS. The LOSS you said didn't exist.

Sorry, thank you for playing!

"samadams - the gvt will end up getting a RETURN on capital for TARP (and us taxpayers) that will outperform most other investment options."

sorry, too funny.

So, if the government makes a bad investment, and taxes some other guy to cover the loss, its a "great investment"??

I love it!

rangersfan is correct

wow, bob, you're 0 for 2 in just a few minutes...

or, wait, I think bob IS rangersfan.

If I loan you 100 dollars and your friend a 100 dollars, you pay me back 110 dollars and your friend scrams...Who did I lose money on? Did i lose money on you? No but now I am coming after you to make up for the money I lost by loaning to your friend.

somewhereelse/eddiewilson/ny902010/ferrisbueller/aliceinwonderland

"samadams get with it - that number has been widely circulated but even current admin admits it will likely come in much, much lower and most of it will be attributed to TARP funds handed out to auto companies, etc. AND the next budget will no doubt include some form of tax or fee or whatever to recoup any "lost" TARP funds that will be repaid by the financials"

That is my post that tried to distinguish between TARP to the banks (made the mistake of calling them financials but you get it). AND the TARP to autos/AIG. The mistake was not to distinguish between the financials (banks) and AIG. That was probably apparent to all expect you and shotgun buddy samadams. Everything else is exactly what played out today.

Then you were wrong about agreeing with rangersfan. He said the opposite of what you said.

Rangersfan says there was no money lost on the one deal. You certainly lost money on the friend. Hell, you said it yourself. "make up for the money I lost". your words. Obama said it to "make up for the losses".

Thanks for your support! As I said, rangersfan was off his rocker here.

How did he say the opposite of what I said? He said money was made on the financials and there were losses on the auto industry and AIG. Now the gov't is going after the financials to make up for loss on auto industry and AIG.

That would be correct... if only it were true!

Money was lost on the financials, too.... (rangers fan conveniently leaves out... uh... the financials who didn't pay back!!). I love it!

"That is my post that tried to distinguish between TARP to the banks (made the mistake of calling them financials but you get it). AND the TARP to autos/AIG."

Wait, let me get this right... you just tried to move the AIG money from the financial portion to the, uh... AUTO PORTION!

Oh my lord, you have to be kidding me. Talk about trying changing a story to save face! AIG is part of the auto bailout?

I love it!

Sorry, but the AIG bailout was done... FOR THE BANKS.

Sorry, hunny, the more the argue, the deeper you dig yourself in.

As of last month:

"The Treasury Department said last week that it expects $19 billion in total profit from its infusions and other investments in financial institutions, reversing the agency's initial projection of a $76 billion net loss."

http://online.wsj.com/article/SB10001424052748704869304574595600479204352.html

Compared to the enormous risks the Govt/Tax payer took with the enormous bail out of banks (hundreds of billions spent) the returns on investment are too small.

Let the Gov't boost its returns on the tremendously risky investment.
That's what any hedge fund would do.
Why does't the Gov't just whip out the old 2/20 rule and demand 20% of the profits from each bank.
Seems reasonable that the finance industry should live by its own rules.

"banks will have repaid $161 billion of the $245 billion in capital...".
'aint even close yet.

"reversing the agency's initial projection of a $76 billion net loss."
which demonstrates, again, what I said.... it was expected to be a loss on the financials... and so far is..

but, too little too late. rangersfan is already on to a new story, that AIG doesn't count.. because its part of the AUTO portion of the bailout...

as I said, rangersfan was way off his rocker.

does this include GSEs, AIG injections, and Maiden Lane holdings from Bear???

The key phrase is that it was expected to be a loss. It is now expected to be a profit. I agree that the gov't should find out exactly where the AIG money went and make whoever received it, pay that back. But there is no reason to make the banks pay for the auto industry losses.

Banks asked tax payers of all stripes to bail them out, let the banks bail the auto industry out.
What's good for the goose...

> The key phrase is that it was expected to be a loss.
which rangersfan got wrong, too.

and its not the key phrase. more important phrases are is what it actually is or will be, not what the government (in on the scam) tries to convince us of. and an even more important phrase is who will fix it.

"I agree that the gov't should find out exactly where the AIG money went and make whoever received it, pay that back. But there is no reason to make the banks pay for the auto industry losses."

Why stop there? What about the other losses caused by banks? If they fell short on fiduciary duty, and profited while their clients lost, why should anyone but them pay for it?

> does this include GSEs, AIG injections, and Maiden Lane holdings from Bear???

It includes whatever will enable rangersfan to most easily backtrack.

or, wait, I think bob IS rangersfan.

Hilarious, this coming from a guy that has more handles then a vegas slot room.

I don't get it. As a bank employee, I always pay 50% tax on my bonus EVERY year. What's new here? In addition, do you know how hard one must work to make money?? Forget about 9 to 5, weekends and vacations thanks to the crackberry. In addition, not everyone at a bank makes a lot of money. I'm really tired of this redistribution of the wealth CRAP.

There goes the government again, providing disincentives by penalizing borrowers (the banks) who have done the right thing by paying back the lender (the government). The banks have repaid principal + the robber interest rate charged. Besides, what benefit will the taxpayers receive from squeezing the banks? I'll tell you what - higher borrowing and transactional costs.

What about the bailouts for auto companies? What about all the help that the airlines have received in the past?

East 71, your comments are troubling b/c they indicate that people like yourself in the banking world still have very little understanding that the business practices of the large banks brought the worlds collective economy to its knees.
Banks and bankers have a long way to go before they will have fulfilled their enormous debt to tax payers for bailing them out of the enormous mess they created with their greedy get rich quick schemes.
Do tell us how hard bankers have to work to make 500k, 1mil or maybe 4mil.
Is it as hard as a policeman, a fireman, a soldier in Iraq? Harder than a nurse? A biochemist? A construction worker? A coal miner?
Do tell how hard they are working at Goldman Sachs that they are going to receive an average of over $500,000 bonus per employee

I don't get how folks like E71 don't get it. They think they're actually contributing to society.

If in order to make your bonus, you had to pollute the east river... don't you think you should be responsible for covering the cost of cleaning up?

> The banks have repaid principal + the robber interest rate charged.

Lousy analogy. Its like the guy whose life was just saved by the medavac complaining that the medavac was too expensive.

> There goes the government again, providing disincentives by

Well, in this case, the disincentive is a good thing... we don't want polluters, and we don't want you F*ing up the economy again.

Some of the banks are to blame for the financial crisis, as are the GSEs, the credit rating agencies, irresponsible borrowers who should have known better to take loans they couldn't afford, and others. To just pick one industry and impose a special tax just because they make a lot of money is perverse. What is with all the people on this board who favor socialism?

This is not really a tax, but an increase in borrowing costs for their riskiest assets.

http://www.nytimes.com/2010/01/15/us/15tax.html?src=sch&pagewanted=all

"Is it as hard as a policeman, a fireman, a soldier in Iraq? Harder than a nurse? A biochemist? A construction worker? A coal miner?"

This is the most rediculous comment I had ever seen! Does Bill Gates or Warren Buffett work as hard as a fireman, a soldier or a coal miner? Does that mean they don't deserve the money they earned????? It's a free market out there! If a coal miner feel it's unfair that they are earning less than a banker by working harder, they are free to quit his job and try to find a job in the bank!!!!!

What's wrong for a society to value education????

Pkutina, it's not about the college education. There are many smart people on Wall Street who are worth what they earn. There are also many people on Wall Street who earn what they do because they are in the right place at the right time.

It's also true, that not an insubstantial amount of money earned by wall street was from regulatory and tax arbitrage which never added value, but did expose the country to more systemic risk.

"What is with all the people on this board who favor socialism?"

What is it with the people who confuse taxation with socialism?

> This is not really a tax, but an increase in borrowing costs for their riskiest assets.

Bingo. Government is selling insurance. Thats not a new thing. In this case, they were already providing the insurance, difference now is they are charging!

> This is the most rediculous comment I had ever seen!

You must not read many comments then. ;-)

> Does Bill Gates or Warren Buffett work as hard as a fireman, a soldier or a coal miner?

Probably more than some, less than others.

> Does that mean they don't deserve the money they earned?????

Of course not. But you're arguing the wrong point. The claims being argued against is that folks deserve to be paid $10 million because they work sorta hard.

That people work hard or harder doesn't change that.

Bill Gates and Warren Buffett make money by taking their own dime and making money from it.
If Bill Gates developed software with government money, or Buffett traded only money from the treasury, and there was no consequence in loss, then OF COURSE they shouldn't make the same money.

> It's a free market out there!

If the market was free, banks would be gone, and there would be no bonuses.
So, are you suggesting no bonuses and no banks?

> If a coal miner feel it's unfair that they are earning less than a banker by working harder, they
> are free to quit his job and try to find a job in the bank!!!!!

Sure. But if the coal miner argues that he should get a billion dollar bonus, are we obliged to give it to him because he whined a lot?

IF the coal miner screwed up and blew up his company, should he get a big bonus?

I'm all for folks working hard and getting to keep most of what they earn.

But folks who didn't really make any money, expecting to be rewarded for losing everything... now THAT is funny.